Petrobras voids drillship deal with Ensco due to bribery charges

Brazil’s state-owned oil and gas company Petrobras has cancelled its contract with a drilling contractor Ensco for the drillship DS-5 over corruption charges. 

Petrobras hired the drillship from Pride International, a company Ensco took over in 2011.

Petrobras alleged that there were irregularities with respect to the contracting of drillship DS-5 prior to Ensco’s acquisition of Pride International in 2011. The alleged irregularities purportedly involved a former third-party marketing consultant of Pride to provide services in connection with the DS-5 drilling services contract.

In its SEC Filing on Wednesday, Ensco said it has conducted regular compliance reviews related to its business with Petrobras, and its audit committee engaged independent counsel in June 2015 to lead an investigation into alleged irregularities involving Petrobras.

“To date, the company has found no evidence that Pride, the Company or any current or former employees were aware of or involved in any wrongdoing,” Ensco noted.

On January 4, 2016, Ensco received a notice from Petrobras asserting that Petrobras believes the DS-5 drilling services contract is void effective January 4, 2016.

Without specifying any supporting facts or conduct, Petrobras’ notice alleges that Pride had knowledge that the shipbuilder of DS-5 made improper payments to the former third-party marketing consultant who then shared the improper payments with former employees of Petrobras and that Pride may have assisted in or facilitated these improper payments, said the drilling contractor.

Ensco says that, contrary to Petrobras’ assertion, it has found no evidence that any current or former employee of Pride or Ensco was involved in any wrongdoing, had knowledge of any wrongdoing, or authorized the former third-party marketing consultant to engage in any wrongdoing on behalf of Pride or Ensco with respect to the shipbuilding contract for DS-5. The company has not been contacted by other Brazil governmental authorities regarding alleged wrongdoing by Pride or Ensco or any current or former employees.

In its SEC Filing, Ensco disagreed with Petrobras’ assertion that the DS-5 drilling services contract is void. Furthermore, Ensco intends to assert its legal rights under the drilling services contract. Ensco has responded accordingly to Petrobras notifying them of its position.

However, there can be no assurance that Petrobras will continue to perform its obligations under the contract or that Ensco will be able to enforce its legal rights thereunder, the drilling contractor concluded.

Ensco’s other rigs operating for Petrobras – ENSCO 6001, 6002, 6003 and 6004 – continue to work under their contracts.

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