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Cobalt Axes Rowan Gulf of Mexico Drillship Contract
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Cobalt has decided to axe its drilling contract with Rowan Reliance drillship.
The drilling contract was originally scheduled to terminate on February 1, 2018, however the company has move forward that date to March 31, 2017.
The amendment provides that Rowan will receive cash payments totaling approximately $96 million, that the rig remains at its current day rate of approximately $582,000 and that the drilling contract may be terminated as early as March 31, 2017. In addition, if Cobalt continues its operations with the Rowan Reliance after March 31, 2017, the day rate will be reduced to approximately $262,000 per day for the remaining operating days.
Rowan was able to hook Cobalt into agreeing to use them as the exclusive provider for the next 5 years at rates to be determined by the market.
A look at the chart below shows why Cobalt may want to end the contract now. Rig rates were $600k a day when the rig was originally commissioned. Current rates have dropped more than 50%.
Source : Cobalt International via Shale Experts Presentation Manager
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