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LONDON (Alliance News) - Premier Oil PLC and Rockhopper Exploration PLC on Friday said they have terminated their joint venture contract with Ocean Rig UDW following a number of material operational issues with the Eirik Raude drilling unit in the Falkland Islands.
The oil and gas companies entered into the contract in June 2014 and issued a termination notice to Ocean Rig on Thursday, to end the contract with immediate effect.
As a result, Premier will no longer be drilling the Chatham exploration well during the current campaign, but said it is in discussions with the Falkland Islands government regarding the possibility of drilling this prospect in the future.
Rockhopper said in a separate statement that drilling at Chatham will be deferred until the Sea Lion pre-development drilling campaign, and that it has no impact on the planning or timetable for the field development plan for the Sea Lion initial phase development.
Rockhopper added that although it had a cash balance of USD110 million at the end of 2015, the residual costs of the current exploration campaign and the company's continued investment in Sea Lion FEED activities mean its cash balance at the end of 2016 will likely be between USD70 million and USD80 million.
"Whilst it is a shame not to be able to drill Chatham as part of this campaign the resources added at the Zebedee location, along with the potentially very significant discoveries in the Isobel/Elaine area, mean that from a sub surface perspective this has been a hugely successful campaign," Rockhopper Chief Executive Samuel Moody said.
Shares in Premier Oil were trading up 6.2% at 31.58 pence on Friday morning following the announcement, but Rockhopper shares were down 3.2% at 26.38p.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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