Cobalt International Energy Inc. said Tuesday it invoked a "force majeure" provision in a contract for a rig in the Gulf of Mexico, citing restrictions imposed on drilling operations in the wake of the massive oil spill.
Cobalt estimated the financial impact of the force majeure at a net $15 million. The provision frees parties from liability when an extraordinary event such as a natural disaster occurs, preventing them from fulfilling their obligations under an agreement.
In this case, Cobalt cited the government's decision to suspend drilling operations on 33 wells under way in the Gulf as well as its imposition of a six-month moratorium on drilling permits.
Cobalt had signed a contract with Diamond Offshore Co. to lease the rig, which was moored and ready for drilling operations to begin. The company said it has the required permits and insurance needed to start operations.
Cobalt, an oil exploration and production company based in Houston, said it expects the government's moratorium will cause about a six-month delay in its Gulf drilling program. It will release a revised drilling schedule later.
Cobalt also affirmed its intention to begin drilling operations off the shore of Angola in the fourth quarter or early in 2011.
BP PLC's drilling rig exploded off the Louisiana coast April 20, killing 11 workers and setting off the oil spill that the British company is still working to contain.
In morning trading, shares of Cobalt fell 49 cents, or 7 percent, to $6.51; shares of Diamond Offshore fell $3.45, or 5.5 percent, to $59.65 and shares of BP fell $4.86, or 11.3 percent, to $38.09.