Processing Magazine

Ensco terminates rig contract with Petrosucre

June 8, 2009
Ensco International Inc. said its subsidiary terminated a rig contract with Petrosucre, a subsidiary of Petroleos de Venezuela SA, or PDVSA, Venezuela''s national oil company, reported by the Associated Press. As a result, the Dallas-based contract driller said it expects second-quarter earnings to be reduced by 15 cents per share. The company did not provide estimates, but analysts polled by Thomson Reuters forecast an average profit of $1.49 per share. In January, Ensco suspended operations on an oilrig off Venezuela''s Caribbean coast because the South American country owed it $35 million, prompting Petrosucre, PDVSA''s joint venture with Italy''s Eni SpA, to take over operations of its ENSCO 69 jackup drilling rig. PDVSA''s unpaid invoices jumped 145 percent over 2007, to reach $13.9 billion in December, according to Venezuela''s Energy Ministry. Ensco said Petrosucre has not returned the rig to them and has notified the company it will continue to operate it. Petrosucre owes Ensco $16.9 million in net receivables related to work performed before late-January and has not paid past due invoices, according to Ensco. Earlier Ensco submitted a notice of termination to Petrosucre, and, as the notice period has ended, the contract between the two companies has been terminated. The company said it would likely fully reserve the $16.9 million net receivables and write off a $4.8 million deferred tax asset, prompting reduced second-quarter earnings expectations. Ensco added that it is pursuing an insurance claim under its package policy and is pursuing legal remedies for damages related to ENSCO 69.