BP terminates another rig contract

UK-based offshore drilling contractor Ensco has, from oil company BP, received a notice of early termination for ENSCO DS-4, a drilling rig operating in the U.S. Gulf of Mexico.

The estimated effective date of the contract termination is July 2015 based on the projected completion of the customer’s current well program. Under the terms of the contract with respect to early termination for convenience, BP is required to make a lump sum payment estimated to be $160 million based on a projected termination date of July 2015. This amount covers the period from the estimated termination date of July 2015 through the originally contracted expiration date of 15 July 2016.

The lump sum payment is due shortly after the termination date. The approximately $560,000 day rate for ENSCO DS-4 will continue to apply through the termination date currently estimated to be July 2015.

“Ensco is marketing ENSCO DS-4 to potential customers for new contracts commencing after the estimated termination date of July 2015,” the company said in a statement.

Similarly, another drilling contractor, Seadrill Partners, yesterday said that it had received a contract termination notice from BP for West Sirius semi-submersible drilling rig operating in the U.S. Gulf of Mexico.