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Diamond Offshore warns of Pemex, Petrobras rig contract terminations

Diamond Offshore warns of Pemex, Petrobras rig contract terminations
Diamond Offshore has warned that both Petrobras and Pemex plan to terminate drilling rig contracts on a total of five units.

In a 10-K form filing the US Securities and Exchange Commission Diamond Offshore said that a representative of Mexican oil and gas firm Pemex had on 20 February verbally informed of intention to exercise its contractual right to terminate its drilling contracts on the Ocean Ambassador, the Ocean Nugget and the Ocean Summit, and to cancel its drilling contract on the Ocean Lexington which was due to start in September. As yet the company said it had not received written notice on the terminations.

Meanwhile Brazilian state oil and gas firm Petrobras has verbally informed Diamond Offshore of its intention to terminate the contract on the Ocean Baroness as it does not intend to use the rig.

“We are currently in discussions with Petrobras regarding the rig,” the company said.

The terminations would add to eight rigs that Diamond Offshore does not have contracts for, six of which are either cold stacked, or in the process of being cold stacked.

Diamond Offshore warned that there could be more bad news to come. “We currently expect that these adverse conditions will continue through 2015 and likely into 2016 or even longer.

“The continuation of these conditions could result in more of our rigs being without contracts and/or cold stacked and could further materially and adversely affect our financial condition, results of operations and cash flows.”

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