Houston-based Diamond Offshore announced in a recent filing with the Securities and Exchange Commission (SEC) that it expects to lose six (6) rig contracts over the coming months.
In its announcement, Diamond cited verbal notification of lease cancellations from three oil companies: Petrobras, Pemex and Dana Petroleum.
The announcement had an immediate effect on the company by causing its stock prices to tumble over 5% in one day.
Petrobras stated verbally that it intends to discontinue use of the Ocean Baroness, even though it had just signed on for a three-year extension at $310,000.00 per day.
Dana Petroleum also announced termination of its lease, valued at $330,000.00 per day through August 2015, on the Ocean Nomad.
Pemex notified Diamond on February 20th that it intends to exercise its contractual right to cancel drilling contracts on four rigs: Ocean Ambassador, Ocean Nugget, Ocean Summit and Ocean Lexington.
While Diamond claims to be in discussions with Pemex over the cancellation of its drilling contracts, it appears that this announcement is yet another indicator that we could continue to see oil prices–and in turn production–remain low into the Spring and Summer of 2015.
In the midst of this uncertainty regarding what the price of oil will do, layoffs of offshore workers are likely to continue as oil companies batten down the hatches in order to weather the economic storm.
