Gulf Operators Declare Force Majeure on Diamond Rigs

Diamond Offshore reported that four operators have declared force majeure on drilling rigs under contract in the U.S. Gulf of Mexico.

Devon and Murphy Oil have declared force majeure on semisubmersibles Ocean Endeavor and Ocean Confidence, while Chevron and Arena have declared force majeure on jackups Ocean Columbia and Ocean Scepter respectively.

The operators have said the drilling moratorium implemented by the U.S. government would prevent them from drilling in the Gulf. Diamond notified the companies that it does not view the moratorium as coming within the definition of force majeure under the respective contracts, "especially in light of the temporary injunction which immediately prohibited enforcement of the moratorium," Diamond said in a filing with the U.S. Securities and Exchange Commission.

Diamond is in discussions with the four operators in regards to the matter.

Devon has semisubmersible Ocean Endeavor under a four-year contract until late June 2011 at a day rate in the mid-$290,000 range. According to RigLogix, Ocean Endeavor has been waiting on location since early May at West Cameron Block 184.

Murphy has semi Ocean Confidence under a four-year contract through mid-February 2012 at a day rate in the low-$510,000s. The rig is on location at Grande Isle Block 92, waiting government approval to begin drilling operations, according to RigLogix.

Jackup Ocean Columbia is on location at South Timbalier Block 134 conducting workover operations at a day rate in the mid-$40,000s. Jackup Ocean Scepter is contracted for work in the Gulf of Mexico through mid-August at a day rate in the low-$80,000s, according to RigLogix.

Diamond has nine rigs under contract in the Gulf of Mexico, including five under contract for work in greater than 500 feet of water.

Last month, Cobalt Energy International declared force majeure on its contract for Diamond semi Ocean Monarch, also working in the Gulf of Mexico.

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