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Rig contract canceled for Transocean

Murphy Oil leased rig for Gulf of Mexico for $604,000 per day.

By Daniel J. Graeber
Rig contract canceled for Transocean
Rig company Transocean said a contract for a rig deployed in the U.S. Gulf of Mexico was pulled early by Murphy Oil Corp. File photo by A.J. Sisco/UPI | License Photo

ZUG, Switzerland, Feb. 8 (UPI) -- Rig company Transocean said Monday its contract for the Discoverer Deep Seas rig in the Gulf of Mexico was canceled nine months early.

Murphy Oil Corp. was leasing the deepwater rig from Transocean at a rate of $604,000 per day. The rig company said Monday the contract was cancelled early.

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"The rig's contract was scheduled to end in November 2016," the rig company said in a statement. "Transocean will be compensated for the early termination through a lump-sum payment that includes adjustments for operating costs."

The contract started in October 2013, when crude oil prices averaged $109 per barrel for Brent. Brent traded early Monday at around $33 per barrel.

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Lower crude oil prices leaves energy companies with less capital to invest in exploration and production, a trend reflected in lower rig counts. Oil services company Baker Hughes reported the total number of rigs deployed in the United States at 571 for the week ending Feb. 5, down about 60 percent from the same time last year.

Despite running through a column of reserves in the Thunder Bird area in the Mississippi Canyon Block in the Gulf of Mexico, Murphy Oil said in December it was abandoning an exploration well because of "low oil prices and capital allocation review for the 2016 budget."

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Murphy in January said it recorded a net loss of $587.1 million for the fourth quarter of 2015, of which roughly half was tied to exit costs in the Gulf of Mexico. Transocean has yet to issue its earnings report for the fourth quarter.

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Transocean in December said its contract for the Polar Pioneer rig, deployed offshore Alaska, was canceled early by Royal Dutch Shell. The Polar Pioneer rig had a lease rate of $561,000 per day.

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