Cobalt International Energy, Inc. (Cobalt) (NYSE:CIE) yesterday announced that it has entered into an amendment to its drilling contract with Rowan (UK) Reliance Limited, an affiliate of Rowan Companies plc (Rowan), which provides for the early termination of Cobalt’s long term drilling contract for the Rowan Reliance drillship.
Drillship Rowan Reliance - Image courtesy: Cobalt
The drilling contract was originally scheduled to terminate on February 1, 2018 and the Amendment provides for a contract termination date of March 31, 2017.
Additionally, per the Amendment, Cobalt will save 45% of the contract value between the original termination date and the new termination date, or approximately $80 million, and will pay to Rowan the remainder of approximately $98 million. Cobalt also commits to use Rowan as its exclusive provider of drilling services for five years at market rates as determined by normal indices.
Timothy J. Cutt, Cobalt’s Chief Executive Officer, said, “We are very glad to reach an agreement with Rowan that helps our balance sheet in the near term and secures a strong relationship with Rowan for the long term.”
Cobalt is an independent exploration and production company active in the deepwater U.S. Gulf of Mexico and offshore West Africa. Cobalt was formed in 2005 and is headquartered in Houston, Texas.