Paratus Energy Services, through its wholly-owned subsidiary Fontis Holdings, has received a notice from its client for early termination of the drilling contracts for Courageous and Intrepid jack-up drilling rigs due to ‘unfavorable contract terms’.
The Courageous and Intrepid jack-up drilling rigs have been under contract with ‘large national oil company’ since March 2020, offshore Mexico, and scheduled to complete the contracts in 2026.
According to Paratus, the client has exercised the previously disclosed contractual options for early termination.
The drilling contracts for Courageous and Intrepid will now expire on February 28, 2026 as opposed to its original expiration date of November 29, 2026 and May 27, 2026, respectively.
Both rigs are subject to a 365-day notice period, which limits the reduction in Fontis’ backlog to approximately $39 million, corresponding to 3% of Paratus’ overall $1.2bn backlog.
The reasons cited for the early termination includes unfavorable contract terms, such as limited suspension rights and indexation structure of dayrates, with floor and cap, and economic considerations.
Nothing in the client’s notification suggests that this action was driven by reduced operational need for drilling rigs in 2026, according to Paratus.
“This action may enable the client to better align contractual terms across its service providers during 2026, as Fontis’ contracts benefit from certain rights, which have resulted in that all of Fontis’ rigs are on contract, despite the current reduced activity announced by other service providers in the region.
“Following this election, the client has no remaining contractual flexibility to further shorten the contracts for any of Fontis’ rigs,” Paratus said.
As announced last week, Fontis has been awarded a 78-day contract extension for the Oberon jack-up rig. All Fontis rigs are currently on contract and, with the exception of the Titania, all rigs are contracted into 2026.
While Fontis believes higher drilling activity will be required to meet the stated production goals of its client in Mexico, Fontis will continue to explore opportunities for its fleet both inside and outside of this region.
Paratus currently has all its 11 assets under contract, with 10 contracted into next year or beyond, and the majority of contracts extend into 2027 or 2028.