Vantage Drilling, an offshore drilling contractor, has called off a construction and sale contract with Daewoo Shipbuilding & Marine Engineering (DSME) for a newbuild ultra-deepwater drillship.
Vantage ordered the drillship in July 2013 and, according to its 8K SEC filing, terminated the contract on August 13, 2015. The vessel, named the Cobalt Explorer, was due for delivery in the first quarter of 2016.
Vantage says it will seek to recover all funds paid to the shipyard totalling approximately $59.5 million plus contractual interest and any other amounts due under applicable law.
Furthermore, the company anticipates recognizing a non-cash charge of approximately $27 million to $30 million for the write-off of development costs and capitalized interest for the Cobalt Explorer project incurred over the last three years.
“The shipyard may seek to challenge our ability to terminate the contract pursuant to arbitration provisions in the contract, which would result in a delay in recovery of any amounts that might be due to us under the contract,” Vantage said in the filing.
In addition, the shipyard itself may seek to terminate the contract for Vantage’s failure to make the second milestone payment for the Cobalt Explorer under the contract. According to Vantage, such termination by the shipyard might entitle the shipyard to retain all supplies delivered to the shipyard and all milestone and other payments made by Vantage to the shipyard to date, and to elect to sell the vessel and claim any deficiency in proceeds against the drilling contractor.
“We may consider future alternatives with the shipyard for the delivery of the Cobalt Explorer. However, there can be no assurances that the terms and conditions of any such alternatives will be acceptable to us or the shipyard,” the company concluded.
The Cobalt Explorer was supposed to be Vantage’s fourth ultra-deepwater drillship as the company already owns three other, the Platinum Explorer, the Titanium Explorer and the Tungsten Explorer.
Offshore Energy Today reached out to Vantage Drilling seeking further information as to why this has happened. Should the company respond, the article will bi updated accordingly.
Offshore Energy Today Staff