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. These payments 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.
Built this year at Samsung Heavy Industries’ South Korean yard, the ultra-deepwater DP-3 drillship was recently delivered and had been scheduled to commence its initial drilling contract for ConocoPhillips in 4Q 2015.
In its Feb. 18 fleet status report, Ensco said that ConocoPhillips’ ENSCO DS-9 contract added more than $600 million to revenue backlog.