Ensco provided an update on the status of the ENSCO 69 jackup drilling rig given recent events in Venezuela.
As previously disclosed, since May 2007, ENSCO 69 has been contracted to Petrosucre, a subsidiary of Petroleos de Venezuela S.A., the national oil company of Venezuela ("PDVSA"). In January 2009, Ensco suspended drilling operations after Petrosucre failed to meet commitments regarding the payment of past due invoices. Petrosucre subsequently resumed ENSCO 69 drilling operations with its employees and a portion of the Venezuelan crews utilized by Ensco, under observation by Ensco's supervisory rig personnel. Petrosucre advised Ensco at the time that it was temporarily taking over operations on the rig.
Since January 2009, Ensco has engaged in discussions and exchanges of correspondence with Petrosucre regarding each party's contractual rights and obligations, but a resolution has not been reached. In prior disclosure, Ensco noted that should a satisfactory resolution not be reached, Ensco may submit a notice of termination as outlined in the provisions of the contract giving Ensco a right to terminate in the event of non-payment.
Given Petrosucre's non-payment of past due invoices for an extended period of time and the absence of a resolution, Ensco recently submitted a notice of termination. During the notice period that extends through approximately May 30, 2009, Petrosucre may resolve the matter by paying past due invoices or negotiating a satisfactory arrangement with Ensco. If not, as previously disclosed, Ensco may then terminate the contract. Ensco's supervisory personnel continue to observe operations on ENSCO 69.
Separately, the ENSCO 68 drilling rig is under contract with Chevron off the coast of Venezuela and is being operated by Ensco personnel.
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