The deepwater drillers first got dinged when Callon Petroleum scrapped a Gulf of Mexico development project, leaving a Diamond Offshore
A few weeks later, we mourned a death in the oil patch, when Oilexco hurtled toward bankruptcy. The firm's undoing was largely due to two long-term, pricey rig commitments that it was unable to fund. This event could have been viewed as another warning sign for the contract drillers, but I've actually interpreted this development as a pretty positive sign.
The firm's decision to file for creditor protection, a real measure of last resort, indicates to me that Oilexco found it impossible to break its contracts with Transocean
But what if the bodies continue to pile up?
That brings me to Transocean's fleet status update, filed yesterday, which tells us that another client has come up short. This time it's Burgundy Global Exploration, a privately held Filipino concern. Just last month, the firm signed up to take on the C. Kirk Rhein, Jr., most recently hired out to Sasol
Whereas Transocean still considers the Oilexco contract valid, Burgundy Global's failure to post escrow has led the drilling giant to outright cancel the agreement.
If Transocean had more no-name companies like this on its roster, I would be deeply concerned. Fortunately, the rest of the deepwater contracts are by and large committed to industry behemoths. If you're holding shares of Pride International