Malaysian driller Velesto Energy said that a contract to provide a jack-up drilling rig to ConocoPhillips for work offshore Sarawak in Malaysia has been officially terminated after the unit sunk in early May.
Velesto had assigned the NAGA (dragon) 7 jack-up to ConocoPhillips, but the rig sunk due to the penetration of one of its legs into the soil formation whilst jacking up at the US company’s Salam-3 well.
Last month, Velesto confirmed that its insurers considered the rig a total loss. As a result, the drilling contract with ConocoPhillips “is considered terminated without notice as from the moment that the loss occurred,” Velesto said in a stock exchange announcement on Friday.
With the termination of the contract, the earnings of Velesto Energy for financial period ending 31 December 2021 is expected to be reduced by an estimated amount of $8 million. This was the estimated value of the contract, said Velesto.