Cairn: Drillers panic over 7 cancelled rig contracts

Vol 18, PW 12 (12 Feb 15) Exploration & Production

Cairn India has abruptly terminated contracts for seven (7) onland drilling rigs at its producing RJ-ON-90/1 block in Rajasthan in response to the crashing oil price, leaving contractors angry and confused.

Cairn last month (January) told driller Quippo Oil and Gas it no longer needs three of the company's rigs: (1000-hp) Quippo-3, (1500-hp) Quippo-4 and (2000-hp) Quippo-5. A similar message was delivered to French driller COFOR for its 1000-hp rig; to John Energy for John-22 and John-23, both 2000-hp rigs, and to Weatherford for its 750-hp Weatherford-709 rig.

All are working at RJ-ON-90/1 under contracts signed over the last 18 months. "Cairn is not being fair," said one affected contractor.

"It is aggressively cutting costs without thinking about the consequences. You wouldn't think a company of Cairn's size and stature would do such a thing." Cairn originally had 17 rigs at RJ-ON-90/1 but this number has overnight dropped to ten - five drilling and five workover rigs.

Of the five remaining drilling rigs, one 1000-hp rig John-24 is operated by John Energy, two 1000-hp rigs: Weatherford-806 and Weatherford-807 are operated by Weatherford and two 1000-hp rigs under contract to Halliburton are operated by Xtreme Drilling: Halliburton-12 and Halliburton-14. Another source adds Cairn has served notice on Weatherford to de-mobilise one of its two remaining 1000-hp rigs (Weatherford 806) on site, potentially bringing Cairn's rig count in Rajasthan down to nine - four drilling and five workover rigs.