Ensco has updated its Rig Contract Status Report as of July 15, 2009. Updates this month include the status of ENSCO 69, which now is classified as discontinued operations.
On June 8, 2009, Ensco reported that second quarter 2009 earnings would be reduced by approximately $0.15 per diluted share to fully reserve the remaining ENSCO 69 drilling contract net receivable from Petrosucre, a subsidiary of Petróleos de Venezuela S.A., the national oil company of Venezuela, and write off a related deferred tax asset.
Despite the termination of the ENSCO 69 drilling contract, the rig continues to be controlled by Petrosucre. Due to Petrosucre's failure to satisfy its contractual obligations and meet payment commitments, Ensco management believes it is remote that ENSCO 69 will be returned.
As a result, an additional pre-tax loss of approximately $18.1 million was recognized during the second quarter 2009 consisting of the net book value of ENSCO 69 of $17.3 million and other assets of approximately $0.8 million. In total, second quarter 2009 earnings will be reduced by approximately $0.26 per diluted share for items related to the discontinued operations of ENSCO 69.
An insurance claim has been filed under Ensco’s package policy, which includes coverage for certain political risks. The claim process is in the early stages, therefore, no related insurance recoveries will be recorded in second quarter 2009. Ensco is evaluating legal remedies against Petrosucre for contractual and other damages related to ENSCO 69.
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