Petrobras Contract Penalties Swing Vantage Drilling to Profit
Vantage Drilling reported net income of $590.7 million for the second quarter of 2019, thanks to payments of more than $700 million by Petrobras for terminating drilling vessel contracts.
The net income stems from the recent payments by Petrobras of approximately $690.8 million to Vantage Deepwater Company, and by Petrobras America, a subsidiary of Petrobras of approximately $10.1 million to subsidiary Vantage Deepwater Drilling, Inc.
The dispute arose following the Petrobras’s parties’ termination of the Agreement for the Provision of Drilling Services for the Titanium Explorer dated February 4, 2009. The Petrobras parties claimed the Vantage parties had breached their obligations under the drilling contract. The Vantage parties immediately filed the international arbitration claim for wrongful termination of the drilling contract.
Ihab Toma, CEO, commented. “I am very pleased about our agreement with the Petrobras parties and their payments’ to us in aggregate of approximately $701 million. Separately, I am pleased to report that we continue to achieve operational and safety excellence, recording 99% revenue efficiency for the quarter and over two years without a lost time incident. We remain focused on providing the best service to our customers.”
In July 2018, the international arbitration panel ruled in favor of the Vantage entities, rendering an arbitration award of $622 million plus interest against Petrobras. In May 2019, the U.S. District Court for the Southern District of Texas confirmed the arbitration award and denied the Petrobras parties’ petition to vacate the award.