Ocean Rig UDW Inc. (NASDAQ:ORIG)
Ocean Rig UDW Inc. (NASDAQ:ORIG) shares rallied by 8.26% in Monday’s trading session after Lundin Norway invoked a third option for the extension of an existing contract with Leiv Eriksson. The company has since granted Lundin two additional options for drilling new wells in the future. The stock traded higher as investors reacted to reports the new contracts could lead to revenues of up to $85 million.
Lundin Contract Extension
The Lundin contract extension paves way for the rig to be in operation until September pending further extensions. Lundin exercising its seven one-well options could see the rig deployed until the first quarter of 2019. Ocean Rig UDW stands to generate up to $85 million if all optional wells are exercised.
“We are grateful for the support of our major customer in Norway and subject to the successful restructuring look forward to extending this relationship in the long-term,” said, George Economou, Ocean Rig UDW Inc. (NASDAQ:ORIG) CEO.
Ocean Rig UDW Inc. (NASDAQ:ORIG) is an international contractor in the offshore deep-water drilling business. The company provides oilfield services for offshore oil and gas explorations as well as development and production drilling services. Early this year, the company filed for bankruptcy protection under Chapter 15 as part of an effort that seeks to erase up to $3.7 billion in debt.
Bankruptcy protection came on the heels of the company being hit by cancellations from major oil producing customers. Falling oil prices has made it impossible for companies to pursue deep water projects leaving most of the company’s drilling units idle. The Cayman holdings company expects low oil prices to weigh in on client demand heading into the end of the year.
Immediate court filings indicate that Highland Capital Management will not pursue objections to recognitions of Ocean Rig UDW Inc. (NASDAQ:ORIG)’s Cayman proceedings in U.S Bankruptcy court. The firm which holds 7.5% of senior notes is, however, seeking to impose Chapter 7 or Chapter 11 on Ocean Rig.
The firm also continues to push for an involuntary petition against Ocean Rig UDW Inc. (NASDAQ:ORIG). The company fears that under the current structure it may never get a chance to go after the drilling company for alleged fraudulent conveyance.
The firm in a statement has said it will not take a position on whether the court should recognize debtor’s provisional liquidation and scheme of arrangement under the Cayman Island Companies Law.
Ocean Rig UDW Inc. (NASDAQ:ORIG) has already told the court that the Cayman’s holdings are at its Center of main Interests (COMI) even though it moved there from Marshall Island in Apr.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.