Russian oil exploration giant Rosneft sent a cancellation notice to North Atlantic Drilling Company Ltd. (NADL) to terminate its contract for the Energy Endeavor jackup.
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The Energy Endeavor. From Northern Offshore. |
The agreement was part of a multi-rig contract to provide drilling services in the Russian Artic, set to begin in the 2015 summer drilling season.
“While not unexpected, we are disappointed by this development but will nevertheless continue to pursue future opportunities in this region by leveraging our previous experience drilling in the Russian Arctic,” says NADL President and CEO Gary Casswell.
The Northern Offshore-owned Energy Endeavor is currently under a 2.5-year contract with Wintershall in the Netherlands until next month that began in October 2013 at a day rate of about US$160,000.
Rosneft was to use the Energy Endeavor in a $150 million, 2.5-year deal, which was executed in July 2014 between Rosneft, NADL and Northern Offshore.
According to NADL, multiple long-term offshore drilling contracts were put in place between the companies in July, just before the newest round of European Union and US-issued sanctions were enacted. As part of the deal, Rosneft committed to six offshore drilling units until 2022 that were to be in Russian waters beginning in 2015-2017. NADL placed the total revenue potential, exclusive of mobilization at about $4.25 billion.
The contracts included a 2.5-year deal for a Gusto-class jackup, five-year agreements for two newbuild CJ-54 class rigs, the West Rigel, West Alpha, and the West Navigator.
Earlier this month, Rosneft dropped the contract for the West Navigator, which was also scheduled to begin work this summer. The cancellation reduced NADL’s contract backlog by $1 billion.
The West Alpha was pulled from the Arctic in September 2014 due to sanctions. The vessel was under contract with Rosneft and ExxonMobil to drill in the East-Prinovozemelskiy-1 license, at the Universitetskaya-1 well.
In December, ExxonMobil received consent from the Petroleum Safety Authority Norway to use the West Alpha on the Balder field, in the central North Sea.
Read more:
Rosneft drops West Navigator contract
Rosneft deals beat EU sanctions
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