Marathon ends contract for Noble's Jim Day semi

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Jan. 5 -- Marathon Oil Co. confirmed it cancelled its contract to lease the Jim Day deepwater semisubmersible from Noble Corp.

The news came more than 2 months after the Obama administration lifted its ban on drilling in the deepwater gulf following the Macondo well blowout. BP PLC operated Macondo.

Marathon said it remains committed to its exploration program in the gulf and worldwide. "Numerous options are available to access the necessary qualified drilling rigs," Marathon said in a email statement to OGJ.

Noble Chief Executive David W. Williams said his company was disappointed by Marathon's decision. “Fortunately, the Noble Jim Day is one of the most capable rigs in existence, and there are already a number of potential customers interested in a unit of this caliber,” Williams said. 

In December 2010, Noble had said Marathon might terminate the contract if the semi was not ready for work in the gulf by yearend. The semi can drill in 12,000 ft of water.

“Marathon's stated reason for the termination was that the rig had not been accepted by Marathon by Dec. 31, 2010,” Noble said in a Jan. 3 release. “Noble believes the rig is ready to commence operations and should have been accepted by Marathon.”

Noble also reported that an independent third-party affirmed the rig's readiness and that the unit's subsea system, including the blowout preventer, has received its certificate of compliance.

The 4-year contract had a day rate of $515,000, and the day rate could have been as high as $550,000 depending upon cost escalators and revenues outlined in the contract, said John Freeman, an analyst with Raymond James & Associates.

“Moreover, the rig is currently in the Gulf of Mexico, where no deepwater work is being allowed,” Freeman said. “Bottom Line: The rig is now idle and we expect much lower rate as the company tries to secure work.” He suggested the day rate could be $400,000 with at least 3 months of downtime.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

MARKET WATCH: NYMEX oil climbs back above $100/bbl

03/27/2014 Crude oil futures on the New York market climbed above $100/bbl for the first time in a week on Mar. 26. The momentum continued in early Mar. 27 tr...

EPA leads investigation of crude discharge at BP Whiting refinery

03/26/2014 The US Environmental Protection Agency took formal charge of investigation and cleanup efforts after an undetermined amount of crude oil spilled in...

HSC remains closed, fuel cleanup continues after barge collision

03/24/2014 The Houston Ship Channel (HSC) remained closed to unauthorized vessels Mar. 24 as the result of a temporary emergency safety zone being established...

Judge bars Anadarko e-mails as evidence in Macondo blowout hearing

03/21/2014 A federal district judge in New Orleans refused to accept e-mails between Anadarko Petroleum Corp. and BP PLC as evidence in a hearing to determine...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected