Rowan Companies PLC (NYSE:RDC) has provided an update on the status of its fleet as of October 18, 2016. The update shows amendment of some contracts, including early termination and extension of contract period.
As of the status update date, Rowan Companies said it had a total contract backlog of $1.78 billion
Highlights of the fleet status update
Rowan Reliance: Rowan Companies said the customer who contracted rig decided to terminate the contract early on March 31, 2017, but there is an opening for the customer to resume the contract after the termination date. However, for the early termination of the contract, RDC said the customer has agreed to pay $96 million. In the event that the customer wants to continue using Rowan Reliance after the termination, the rig will be priced at a reduced dayrate of about $262,000.
Rowan Gorilla VI: The customer who contracted the rig has given notice to terminate the contract at the end of 2017. In that case, the customer has agreed to pay $250,000 per day for the balance of the contract period, which was scheduled to run until March 2018.
In the event that the customer who contracted Rowan Gorilla VI enters into a different contract with Rowan Companies, then the $250,000 the customer is required to pay for each day remaining under the contract being terminated will be offset by a contract whose daily rate is more than $100,000.
UDW Resolute: Rowan Companies updated that UDW Resolute contract has been amended in a manner that the contract period has been extended and the rates blended. As such, instead of the original dayrate of $608,000, the customer will pay a reduced day rate of $180,000 for 240 days beginning July 1, 2016. After the special 240 days have elapsed, the dayrate will revert to the original rate for the balance of the contract period, which is scheduled to run until October 2017.
What the amendment of UDW Resolute contract implies is that the contract duration has extended by about 312 days while the average rate has come down to $580,000.
Rowan Companies stock is down slightly more than 14% YTD. Depressed crude oil prices have created a difficult environment for drillers and providers of drilling services as contracts are cancelled or revised to ease pain and Rowan Companies has been impacted.