Transocean (NYSE:RIG) came to an agreement late last week with Royal Dutch Shell (NYSE:RDS-A) and BHP Billiton Ltd. (NYSE:BHP) to reduce the day rate on oil rigs operating in the Gulf of Mexico, in light of the misguided moratorium by the Obama administration.
The two companies will pay what is described as a "special standby rate that is lower than the regular contract day rate." As a result, the two companies won't be allowed to declare "force majeure," and instead will have their contracts extended by one day for each day they aren't allowed to drill in the Gulf because of the moratorium.
Force majeure allows companies from having to fulfill their contract obligations under extreme circumstances like faced in the Gulf oil spill.
On the part of BHP, if they aren't able to secure a drilling permit after November 30, when the moratorium ends, they can end the contract or continue paying the special rate. When operations resume, Shell and BHP will begin paying the regular rates again.
Eni SpA (NYSE: E) and Chevron Corp. (NYSE:CVX) have already declared force majeure on several rigs on drillships provided by Transocean.
Subscribe to:
Post Comments (Atom)
I believe RIG is a very good buy.
ReplyDeleteHey there! I've been reading your site for some time now and finally got the bravery to go ahead and give you a shout out from Lubbock Texas! Just wanted to say keep up the fantastic work!
ReplyDeleteFeel free to surf to my blog ... Airplane simulator Game
This is very interesting, You are a very professional blogger.
ReplyDeleteI have joined your rss feed and sit up for in the hunt for extra of your wonderful post.
Additionally, I have shared your site in my social networks
Also visit my blog ... anti cellulite treatment