Petrobras cancels four rig contracts

Petrobras gave two companies bad news. The Brazilian giant told Maritima Petroleo e Engenharia of Brazil and Falcon Atlantic, a division of R&B Falcon, that the contracts on their respective rigs were cancelled. The total value of the cancellation was $540 million and was reportedly due to delays in execution.

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Petrobras gave two companies bad news. The Brazilian giant told Maritima Petroleo e Engenharia of Brazil and Falcon Atlantic, a division of R&B Falcon, that the contracts on their respective rigs were cancelled. The total value of the cancellation was $540 million and was reportedly due to delays in execution.

Most of the loss was attributed to Maritima, which had two contracts worth $393 million for two Amethyst class deepwater semisubmersibles. The cancellation of the two semis was due in part to an earlier problem that arose when Davie, the Canadian shipyard, contracted to build the two vessels. The firm filed for bankruptcy and closed its doors. A representative from the company said previously that the cancellations were expected due to bankruptcy. He also added that the company was somewhat protected in that the bankruptcy of Davie fell under the force majeure clause of the contract.

Falcon lost the contract on its Falcon 100 semisubmersible, at a cost of $125 million. Falcon says it believes Petrobras does not have the right to cancel the contract and has engaged Brazilian counsel to pursue its rights under the contract. Falcon added that it intends to take legal action to enforce rights under the contract.

But, this is not the only bad news from Petrobras. The Brazilian producer also said that the contract for the Peregrine VII drillship, in which R&B had been the low bidder, had been awarded to another drilling contractor. Petrobras said that the reason for this contract change was because Petrobras wanted to begin the contract prior to the expected delivery date of the vessel.

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The new Friede Goldman Halter's massive presence on the US Gulf coast.
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Friede Goldman, Halter merging

The mega-merger fad is not over. Two of the biggest players in offshore construction and engineering have pulled their resources to form a new industry giant. Friede Goldman has merged with Halter Marine Group to form Friede Goldman Halter, Inc. The new combined company will have a backlog of more than $1 billion, and a workforce of over 12,000 employees. The company will be headquartered in Gulfport, Mississippi.

Under the terms of the merger, each Halter share will be exchanged for 0.4614 share of Friede Goldman. J.L. Holloway, Chairman and CEO of Friede Goldman, will retain his positions within the new company and John Dane III, President and CEO of Halter, will become Vice Chairmen and COO and succeed Holloway in two years.

The merger offers significant advantages. For Friede Goldman, the company will now have access to the most shipyards on the US Gulf coast, which will combine with its own Friede Goldman Offshore yard in Pascagoula and international yards. Halter, in turn, gains the naval architecture and engineering experience of Friede Goldman. Combined, the two companies will be a major force in shipbuilding and design.

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The Bideford Dolphin-finally done.
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Bideford Dolphin saga over - for now

Saga's continuing saga over the Bideford Dolphin seems to be over - for now. The company had given Fred Olsen Energy a deadline in May for delivery of the vessel and the vessel was delivered on time, or by the new deadline. Saga has taken delivery of the rig and it is being moved to a new location. Fred Olsen said the nominated 48-hour continuous operation test was completed and no further items of significance prevent the safe operation of the rig. The company added that the Bideford Dolphin fulfills the specifications in the contract, in addition to the certificate obtained by DNV and all other relevant maritime certificates. The Bideford Dolphin has been delayed almost two years, due mainly to problems with the RamRig drilling package.

Statoil changes position on West Navion

Statoil has changed its mind twice over the West Navion drillship. In the same day the company cancelled the contract on the drillship and awarded a new contract. Statoil initially told contractor Smedvig that it was canceling the five-year contract on the drillship due to late delivery. In addition, Statoil wanted Smedvig to buy out the 50% stake in the rig belonging to Navion, a company in which Statoil is the majority stakeholder. Smedvig refuted the terms and said that Statoil had no right to cancel the contract and that it would seek full compensation for its losses.

However, later that same day, Statoil withdrew the cancellation and awarded a new one-year contract for the vessel at a dayrate of $185,000 and a mobilization fee of $10 million. Smedvig accepted the contract and said that it would still continue to seek compensation from Statoil for its losses, claiming that the delays and cost overruns were out of the company's control. In addition, Navion also said it would seek compensation from Smedvig for the losses it had incurred from the project.

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The West Navion drillship is cancelled and contracted in the same day.
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According to the latest reports, the cost and delay for the drillship have risen. At last count, the revised total cost is estimated to be $560-600 million, depending upon the final completion date. Delivery is now scheduled for the third quarter, but there have been concerns expressed related to the delivery and commissioning of critical components such as the BOP and the RamRig drilling package. Problems with these items could push delivery back to the fourth quarter.

Are long-term contracts?

Long-term contracts may be back on the rise, at least offshore Brazil. Petrobras has granted two long-term contracts in the past month. Diamond Offshore was awarded a three-year contract for its Ocean Clipper dynamically positioned drillship beginning in the fourth quarter. Transocean also received a contract for its Discoverer Seven Seas drillship for 30-months beginning next month.

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