Ocean Rig Hits Out At Premier Oil With $63m Demand

Published at 11:18AM - 16/02/16

Ocean Rig hits out at Premier Oil with a US$63 million demand in relation to the early cancellation of the ultra deepwater drilling Eirik Raude.

The move from Ocean Rig follows a statement released Friday 12th by Premier Oil, stating that they were cancelling the contract for the Eirik Raude “Following a number of material operational issues with the Eirik Raude rig during the term of the contract to date,”

Premier’s cancellation came with immediate effect, and brought an end to the company’s drilling operations offshore Falklands, with the planned exploration of the Chatham prospect cancelled.

Ocean Rig Hits Out At Premier Oil

If Premier Oil were to prove their case, it would exonerate them from all further charges related to the contract with Ocean Rig.

However Ocean Rig have now issued a counter statement claiming that they are viewing Premier’s move purely as a ‘termination for convenience’; and do not recognise any claim for operational issues.

The offshore drilling contractor’s stance also comes with a payment demand of US$62.9 million, inline with the contract’s termination clause.

A spokesman for the company said: “Ocean Rig has accepted Premier Oil Plc.’s termination for convenience and is entitled to a termination fee of up to $62.9m.”

“In case Premier Oil Plc. contests the payment of such fee we intend to commence arbitration proceedings without any further notice.”

The news comes at the same time as Ocean Rig announced the cancellation of second a long-term contract, with oil major Total, for the 7th generation drillship Ocean Rig Apollo.

Ocean Rig CEO, George Economou, added: “It is really regrettable that two of our clients have decided to terminate drilling contracts for convenience.”

“This is a reminder of the extremely challenging times facing the offshore drilling industry and oil companies taking unprecedented action to reduce their capital expenditures.”

“The prospects for the industry remain bleak and we currently see limited prospects of a recovery before 2018 at the earliest.”