Ever since I saw Petro-Canada
Deepwater developments, in contrast, had generally been moving forward without a hitch. Until last week, that is.
In the brief press release, Callon cited increasing costs and declining commodity prices as reasons to suspend development. There was also mention of a need for the first development well to be sidetracked. Even if you don't speak oilpatch, that doesn't sound so good, does it? Partner Itochu, in its own project-suspension announcement, makes the drilling disappointment more explicit in its own release, when it notes that new information from the drilling program contributed to the decision.
Because this project sounds like it came up short on the reserves side, I'm not convinced that we can draw too strong a conclusion about the future of other, more robust deepwater developments. Perhaps most informative will be the fate of the Ocean Victory, a Diamond Offshore
If the drilling contractor manages to promptly plug the gap in its schedule at an attractive dayrate, that will speak volumes about the ongoing demand for deepwater drilling assets.