Cobalt International Energy announced an agreement with Rowan (UK) Reliance Limited for the early termination of its long-term drilling contract for the Rowan Reliance drillship.
The contract was originally scheduled to terminate on February 1, 2018 but will now terminate on March 31, 2017, under the new agreement.
“We are very glad to reach an agreement with Rowan that helps our balance sheet in the near term and secures a strong relationship with Rowan for the long term”, Cobalt’s Chief Executive Officer, Timothy J. Cutt, said.
Cobalt Terminates Drillship amid GOM Exit
Under the Amendment, Cobalt will also save 45% of the contract value between the original termination date and the new termination date, or approximately US$80 million (£60.45 million) and will pay Rowan the remainder of approximately US$98 million (£74.05 million).
Additionally, the company is committing to using Rowan as its exclusive provider of drilling services for five years, at market rates determined by normal indices.
Cobalt is pushing Gulf of Mexico operations to the bottom of the list
The Rowan Reliance drillship was drilling in the Gulf of Mexico at the Goodfellow-1 exploration well, which came out dry.
It then moved to North Platte to drill its North Platte 4 appraisal well, with first production expected in 2021.
The contract will thus be terminated after the Rowan drillship finishes up work at its North Platte-4 appraisal well, located in the US Gulf of Mexico.
Cobalt Prioritises Angola Against Gulf of Mexico
In August, Cobalt announced in its second quarter results that it was setting Angola as its top priority, after posting a multimillion dollar loss over the period due to a dry well in the Gulf of Mexico.
As such, its operations in North America, namely the Gulf of Mexico and Mexico, were being pushed to the bottom of the list, the CEO explained at the time.
Rowan Reliance Drillship
The CEO explained that Cobalt would not pursue deep water Gulf of Mexico opportunities at this time and had closed its Mexico office.
Additionally, the move followed a severe reduction in the company’s workforce of approximately 60%.