Freeport to pay $215 million to Rowan

OE Staff Published May 24, 2016 8:55 am ET

Freeport-McMoRan Oil & Gas is to pay Rowan Companies US$215 million under an agreement to cut short a rig contract with immediate effect.

Freeport had contracted to use the drillship Rowan Relentless up to June 2017.

Rowan may also receive additional contingent payments from Freeport of $10 million and $20 million, respectively, depending on the average price of oil over a 12-month period, says Rowan. Rowan says it will also reduce its costs for the Rowan Relentless by efficient warm stacking it.

Freeport recently announced a restructuring of its oil and gas business and cancelled a planned stock market listing for the debt laden unit. which is operated through FMOG.

Tom Burke, President & CEO of Rowan, said: "I am satisfied with this resolution given FMOG did not have any ongoing work for the Rowan Relentless. The Rowan Relentless, our fourth high-specification ultra-deepwater drillship, had outstanding operational performance on this contract, delivering safe, reliable and efficient operations."

This isn't the first time Freeport-McMoRan has had to pay the price for a cancelled rig contract. Earlier this month, the company shelled out $540 million to Noble when it cancelled drilling contracts for the drillships Noble Sam Croft and Noble Tom Madden.