Cobalt Declares Force Majeure on Drilling Rig

Cobalt announced that due to the moratorium in the Gulf of Mexico that it was invoking the force majeure provision relating to its drilling operations on Garden Banks 959, location North Platte #1.

Cobalt had contracted the Ocean Monarch (Diamond Offshore Drilling) and had the rig moored and ready to begin operations. The suspension of all drilling operations by the US Government in the Gulf of Mexico leaves the company unable to commence its drilling plans although necessary permitting and insurance requirements for drilling were already in place, hence the decision to trigger the force majeure claim.

Cobalt expects that expenditures related to force majeure will amount to approximately $15million under the terms of its contract. According to RigLogix, Diamond Offshore was to receive a dayrate of approximately $440k/day from Cobalt for the Ocean Monarch.

At this time Cobalt does not expect the moratorium will disrupt its plans to use the ENSCO 8503 (a newbuild semisub slated for deliver in 4Q10) for drilling that commences in 1Q11. RigLogix has the dayrate for the ENSCO 8503 at approximately $528k/day once it commences operations next year. Cobalt has stated that it will publish a revised drilling schedule as soon as more facts are known.