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Petroleum

Noble Drilling Corporation Files Suit Against Samedan Oil and Mariner Energy

Strategic Insights

— 2 min read

Noble Drilling Corporation, in collaboration with its subsidiaries Noble Drilling Services Inc. and Noble Drilling (U.S.) Inc., has taken legal action against Samedan Oil Corporation and Mariner Energy, Inc. for breach of contract. This move comes as Noble Drilling has been focusing on expanding its fleet of rigs capable of deepwater offshore drilling, with a significant emphasis on converting and upgrading existing rigs to operate in water depths greater than 5,000 feet. Five of the six rigs in this program have been delivered under long-term contracts, with the sixth rig, the Noble Homer Ferrington, scheduled for delivery in late February or March 2000.

Key Takeaways:

  • Noble Drilling has filed a lawsuit against Samedan Oil Corporation and Mariner Energy, Inc. for breach of contract.
  • The lawsuit concerns the use of the Noble Max Smith and Noble Homer Ferrington rigs, which were previously discussed in letter agreements with the two defendants.
  • The Noble Homer Ferrington, capable of drilling in 6,000 feet of water, is scheduled for delivery in late February or March 2000 and is subject to a letter agreement requiring Mariner and Samedan to sign a five-year drilling contract and a related rig-sharing agreement.
  • Samedan has questioned its obligations under the letter agreement and expressed concerns about the rig's design criteria, while Mariner initially expressed its intention to work towards a mutually acceptable outcome but later viewed the letter agreement as expired.
  • Noble Drilling believes the defendants have binding commitments to use the rigs and that the rigs meet the originally agreed-upon design criteria.
  • If the matter is not resolved promptly, Noble Drilling could experience delays in finding alternate customers, potentially affecting future revenues and operating income.
  • Each $20,000 reduction in dayrate from the existing letter agreement rate would reduce Earnings Per Share (EPS) by approximately $0.036 on an annualized basis.
  • Noble Drilling Corporation is a leading provider of diversified services for the oil and gas industry worldwide, with a fleet of 47 offshore drilling units located in key markets worldwide.
  • The company provides contract drilling services, engineering and production management services, and turnkey drilling services, with its common stock traded on the New York Stock Exchange under the symbol "NE".

Statistics:

  • 5 out of 6 rigs in the deepwater program have been delivered under long-term contracts.
  • The Noble Homer Ferrington is scheduled for delivery in late February or March 2000.
  • Mariner expressed its view that the letter agreement had expired in March 1999.
  • Samedan questioned its obligations under the letter agreement and expressed concerns about the rig's design criteria.
  • Each $20,000 reduction in dayrate from the existing letter agreement rate would reduce EPS by approximately $0.036 on an annualized basis.
  • Over 60% of Noble Drilling's fleet is currently deployed in international markets.
  • Noble Drilling's fleet consists of 47 offshore drilling units, 9 semisubmersibles, 3 dynamically positioned drillships, 32 jackup rigs, and 3 submersible units.

Sources:

  • Noble Drilling Corporation press release, Jan. 10.
  • [1] (Note: The original source does not provide a specific reference or date. In compliance with the instructions, I have left the source as provided in the original text.)

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