ConocoPhillips today for its convenience provided a notice of termination for the three-year ENSCO DS-9 drillship contract. Under the terms of the contract, ConocoPhillips is obligated to pay Ensco termination fees monthly for two years equal to the operating day rate of approximately $550,000, which may be partially defrayed should Ensco re-contract the rig within the next two years and/or mitigate certain costs during this time period while the rig is idle and without a contract.
ConocoPhillips is also contractually obligated to reimburse certain costs that Ensco incurs due to the termination of the contract for ConocoPhillips’ convenience. Given these contract terms, Ensco does not anticipate a material negative impact to its financial results for 2015 and 2016 as a result of this termination.
ENSCO DS-9 was recently delivered and had been scheduled to commence its initial drilling contract for ConocoPhillips in the fourth quarter of this year.