STAVANGER, Norway, Feb. 17 (UPI) -- Norwegian energy company Statoil said Wednesday it decided to cancel a rig contract with Maersk Drilling, transferring the terms to French supermajor Total.
The Norwegian company said it decided to cancel its contract for the Maersk Gallant rig.
"The Maersk rig has been on contract with Statoil for two years, since Aug. 21, 2014, and since Oct. 9, it has been sub-chartered to ConocoPhillips," the company explained. "Between Feb. 14 and Aug. 21, 2016, the Maersk Gallant is on a new contract with Total, who will pay cancellation fee according to the former contract."
The jack-up Gallant was last listed as operating in the North Sea. No information was given on the day rate or other terms for the lease. The rig has worked in the North Sea since it was commissioned in 1993.
The cancellation from Statoil comes at a time when businesses servicing the exploration and production side of the energy sector face pressures from lowered industry spending that's developed since crude oil prices started collapsing in mid-2014.
Maersk Drilling last week said it landed a dozen new contracts last year, though the industry pressures were apparent. Day rates were revised sharply lower given the weak oil economy.
"Given the new oil reality, we have to conduct our operation at a completely different cost level," Maersk Drilling CEO Claus Hemmingsen said in a statement.
Statoil outlined a capital spending plan for 2016 of around $13 billion, down about 11 percent from last year. Earnings for the fourth quarter were down 44 percent year-on-year to $1.75 billion.
President and CEO Eldar Saetre said fourth quarter results were largely a reflection of lower crude oil prices. The price for Brent crude oil, the global benchmark, is down more than 25 percent from the start of the fourth quarter.
Statoil was one of the few reporting a decline in output, saying equity production during the fourth quarter was down 3 percent year-on-year. Exploration expenses, meanwhile, were lower by 44 percent