Cobalt International Energy, Inc. (“Cobalt”) today announced that it had invoked the force majeure provision under the drilling contract with Diamond Offshore Company for the Ocean Monarch drilling rig .
This rig was moored and ready to begin drilling operations at the location of our North Platte #1 exploratory well on Garden Banks 959. 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. 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.
About Cobalt
Cobalt is an independent oil and gas exploration and production company focusing on the deepwater U.S. Gulf of Mexico and offshore Angola and Gabon. Cobalt was formed in 2005 and is headquartered in Houston, Texas.
Force majeure (French for “superior force”), also known as cas fortuit (French) or casus fortuitus (Latin), is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term “act of God” (e.g., flooding, earthquake, volcanic eruption), prevents one or both parties from fulfilling their obligations under the contract. However, force majeure is not intended to excuse negligence or other malfeasance of a party, as where non-performance is caused by the usual and natural consequences of external forces (e.g., predicted rain stops an outdoor event), or where the intervening circumstances are specifically contemplated.
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Source: Cobaltintl, June 2, 2010;