Diamond Offshore to move semi from Gulf of Mexico

By OGJ editors
HOUSTON, July 13
-- A Diamond Offshore Drilling Inc. subsidiary agreed to suspend a Gulf of Mexico contract and signed a multiwell international commitment with a subsidiary of Murphy Exploration & Production Co. to move the Ocean Confidence semisubmersible drilling rig to Congo (Brazzaville).

The move follows close on the heels of Diamond Offshore’s announcement last week to move a deepwater drilling rig from the gulf in response to the federal moratorium (OGJ Online, July 9, 2010).

The Ocean Confidence semi departed the gulf and is expected to arrive off Africa within about 60 days. The US Department of the Interior on May 30 imposed a 6-month deepwater drilling moratorium in response to the Apr. 20 explosion on the Transocean Deepwater Horizon semi and consequent spill.

Operators have said this prevents them from drilling in the gulf. Other operators have declared force majeure on gulf drilling contracts with Diamond Offshore and other drilling contractors. Court challenges to the moratorium have been successful and are under appeal. Deepwater drilling in the gulf remains suspended.

Larry Dickerson, Diamond Offshore president and chief executive officer, said, “As the uncertainty about continued deepwater drilling in the [gulf] persists, we must consider alternatives that allow our deepwater assets to remain employed.”

The contract suspended with Murphy was restructured into a 1-year commitment in the gulf that is expected to recommence when Murphy is satisfied that it can obtain the necessary permits and can meet any new regulatory requirements, Dickerson said.

The new international contract is a three-well commitment, plus an option for additional work, and includes an obligation for the customer to mobilize the rig to and from Congo. The remaining 1-year gulf commitment and new international commitment are expected to generate combined maximum total revenue of about $234 million.

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