Pride International has provided an update to the operating status of its midwater semisubmersible rig Pride Venezuela located in West Africa.
In March 2009, the rig was relocated from the drilling location of the customer, a subsidiary of Chevron Corporation, to Luanda Bay, Angola, for planned repairs and a mid-period survey. Following arrival, an inspection of a section of the hull revealed an unacceptable level of corrosion, which will require a dry-dock facility to conduct permanent repairs. No dry-dock facilities exist in Africa for a semisubmersible. Therefore, the rig will be relocated outside of Africa for further evaluation and to conduct the necessary repairs. The hull repairs, along with other maintenance and repairs to the unit, are expected to require most of the remaining term of the contract, which had been expected to conclude in March 2010. Consequently, the Company and Chevron have mutually agreed to the termination of the remaining term of the contract for the rig.
Loss of revenue resulting from termination of the remaining contract term is expected to reduce the Company's backlog by approximately $140 million. The revenue loss is expected to lower second quarter 2009 results by an estimated $0.03 per fully diluted share from the previous guidance provided by the Company of $0.66 to $0.71 per fully diluted share, while the third and fourth quarters of 2009 are expected to be negatively impacted by approximately $0.13 per fully diluted share per quarter. Further impact is expected to the financial results in the second, third and fourth quarters of 2009 resulting from the cost of mobilization and repairs, the majority of which cannot be reasonably estimated until further inspection of the rig is completed at the dry-dock facility.
The Pride Venezuela is a conventionally moored semisubmersible rig, capable of operating in waters depths of up to 1,500 feet. The rig began active service in 1982.
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