Cobalt declares force majeure on deepwater drilling contract for Diamond's Ocean Monarch

Source: Cobalt International

Cobalt International Energy, Inc. (CIE) has invoked the force majeure provision under the drilling contract with Diamond Offshore Company for the Ocean Monarch drilling rig.

The reason for invoking force majeure was the steps announced on May 27, 2010 by the United States Government which suspended all drilling operations in the deepwaters of the Gulf of Mexico. 

This rig was moored and ready to begin drilling operations at the location of our North Platte #1 exploratory well on Garden Banks 959. Cobalt had obtained all necessary permits and insurance as required by law and regulation to commence drilling operations.

Cobalt believes that the direct financial impact of triggering force majeure on the Ocean Monarch will result in a net expenditure to the company of approximately $15 million. 

Looking to the future, Cobalt believes that the action taken by the United States Government on May 27, 2010 will likely result in the delay of our Gulf of Mexico drilling program by approximately 6 months, or roughly one well. Cobalt expects to accept delivery of the Ensco 8503 drilling rig in the 4th quarter of 2010, and be in a position to begin drilling operations in the 1st quarter of 2011. 

The initial term for the Ensco 8503 is two years with an option to renew for an additional two years. Other than this initial six month delay, Cobalt reaffirms its intentions to execute all aspects of its entire Gulf of Mexico exploration and appraisal program as previously announced. A revised drilling schedule will be published as soon as more facts are known. 

Cobalt also confirms its intent to initiate drilling operations offshore Angola in the 4th quarter of 2010 or the 1st quarter of 2011.

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