You need to read both the Hercules and Maersk releases and the original contract awards. Hercules paid 10% down, then other 10% on a c. $240m contract . 80% was due to the shipyard on completion but Hercules hadn't enough money to pay and has just gone into its second Chapter 11 process.
All Maersk had to do was pay the 80% due to the yard.
It doesn't say whether Maersk made any other payment on top of the $196 mio but it does show how valuable a contract at higher rates is. In our case it appears none have yet been signed so I don't really know what to make of it. The devil is in the detail as always. Another way of reading it is that BP & JX Nippon expected it to fall into their laps but got gazumped. Big oil can be very greedy and know they have the advantage (usually).
That is actually a very clever deal by Maersk and if I were BP or JX Nippon on Culzean I would have been spitting blood.
Maersk get the (now) Maersk Highlander for $196m and a drilling contract with themselves at $225,000/day which BP & JX Nippon pay 50% of. If Hercules had defaulted on the drilling contract the Culzean partnership could have gone to market to pick up a rig a lot cheaper - I would say maybe $100,000/day, maybe even less - the operating cost of a jack-up rig in UK waters is about $65,000/day.
But the partnership had approved the existing contract and when Maersk Drilling stepped into Hercules' shoes there would be nothing Maersk Oil could do about it no matter how hard BP & JX Nippon banged the table. Not that Maersk Oil would care.
So over the next five years Maersk will make $150m out of BP & JX Nippon and they will have a great rig for virtually nothing as a result.
Just shows how much money floats around between parties in these long term contracts.
Talking about hurricane They're doing one well straight down and one sidetrack! RIG is coming from Norway! Fracture basement granite reservior Expected to commence drilling end of June / July Robert trice getting XCITED Knowledgeable oilfield investors invest Simples :-)
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