[QUOTE=c.captain;155500]Rob
you are saying that operators are going to exit contracts before their expiration in order to get equivalent rigs for significantly less but there must be penalties to these operators to pull the plug without justifiable cause? Certainly TO or any other drilling contractor will not let their clients just exit to save money…think of the precedent that would set for the entire industry?[/QUOTE]
I spent 3 years working on a case where this happened.
2009 economy crashes. 2010 Macondo happens.
Meanwhile Noble Jim Day is built in Singapore and towed to GOM. When Noble tenders it for acceptance testing, Marathon decides it is upside down in its 4 year deal with Noble and terminates contract, blaming “deficient” rig and crew. Yet the same “deficient” rig goes to work immediately for Shell, only at a lower rate.
The formula is simple and time tested: drop rig, hire lawyers, have a drawn out legal proceeding, pay a settlement that’s’ less than what you owed under the contract. Drilling contractor will do business with you again anyway, because drillers always have weaker bargaining position.
You can absolutely bet oil companies will do this again in the near future.
Give me a shout at http://www.morrowsheppard.com if you have any questions.
Nick