Cobalt sinks deeper into red over rig charges, well writedown

Oil exploration company Cobalt International Energy posted a bigger loss for the third quarter of 2016 compared to the prior-year quarter due to charges from an early rig release with Rowan and writedowns related to an exploration well in the U.S. Gulf of Mexico. 

On Tuesday, Cobalt reported a net loss of $218.2 million for 3Q 2016, compared to the net loss of $59.2 million in the corresponding quarter last year.

According to the company, the increase in loss is mainly attributable to the Rowan contract amendment of $95.9 million and the additional write off associated with the Goodfellow exploration well of $42 million, which together resulted in a $0.34 per share loss during the quarter.

To remind, Cobalt and Rowan amended a contract for the Rowan Reliance drillship in September, allowing for an early termination. The amendment provides for a contract termination date of March 31, 2017.

Meanwhile, the drillship started drilling the North Platte #4 appraisal well in the Gulf of Mexico in September and is carrying on with appraisal operations. The well has a projected total measured depth of 34,303 feet and is designed to further delineate the North Platte Inboard Lower Tertiary reservoir. Results from the North Platte #4 appraisal well are expected in early 2017.

Once operations are completed at North Platte, Cobalt will release the Rowan Reliance drillship according to the amendment to the drilling contract. Cobalt is the operator of the North Platte with 60% interest and French oil company is its partner with the remaining 40% working interest.

In addition, drilling operations started on the Anchor #4 appraisal well in September 2016. Results from this well are also expected in early 2017. Cobalt owns a 20% non-operated working interest in the Anchor discovery unit.

Cobalt updated its full year guidance for capital expenditures for continuing operations in the U.S. Gulf of Mexico to be between $525-575 million in 2016, of which approximately $380 million has been spent as of September 30, 2016.

Offshore Energy Today Staff

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