The Rising Influence of Rising Affluence

[DewDiligence]

CVX Declares Force Majeure on GoM Jackup Rig

[This seems like a stretch for CVX. Comments?]

http://www.reuters.com/article/idAFN2815454520100628

›Mon Jun 28, 2010 2:05pm EDT

SAN FRANCISCO/NEW YORK, June 28 (Reuters) - Chevron Corp (CVX) declared force majeure on a Hercules Offshore (HERO) jackup rig due to new rules in the Gulf of Mexico, the second notice in just a few days for shallow-water drilling there.

The U.S. government effectively halted oil and gas drilling in the deepwater Gulf of Mexico because of the continuing leak from the BP Plc well, but tighter regulations led Apache Corp (APA) to declare force majeure last week on a Rowan (RDC) shallow-water rig, or jackup.

Force majeure relieves a company from liability when it cannot fulfill contractual obligations because of natural and unavoidable catastrophes.

New rules on restrictions from the Bureau of Ocean Energy Management, formerly known as the Minerals Management Service, are prompting energy producers to pull back from the shallow waters.

Hercules said it was in talks with Chevron to resolve the issue, and it would consider legal action if those talks did not yield a deal.

The force majeure on the Hercules 120, declared on June 23, came one day after Apache declared its own force majeure on the rig owned by Rowan Cos Inc.

The Hercules 120 is earning a dayrate of $27,000-$29,000, a range that was set to increase by $4,000 from July until the contract ran out at the end of 2010.

San Ramon, California-based Chevron also operates two other rigs owned by Hercules, but those were not subject to the notice of force majeure.‹