31th aug option not taken, page-10

On 9th July, I posted (4243663) :-

"Rathmore

Whilst researching Transocean yesterday, I came across a new "Fleet Status Report" , dated 1st July, 2009, issued by Transocean.

For anyone interested the link is:

http://www.deepwater.com/_filelib/FileCabinet/fleetupdate/2009/RIGFLT-JUL-2009.pdf?FileName=RIGFLT-JUL-2009.pdf

This Report indicates (Page3) that TOL is definitely contracted to CoP for period July09 to Sept09 (which we already know), but it has a "Footnote 34" at the end of the Report which refers to the termination of the previous Contracts with NXS and then OEX. Transocean indicate that they are "pursuing all appropriate remedies" in relation to these terminations.

Not sure what this all means, but may be possible that upcoming legal disputes between those parties could hold up movement and spud date for K-1 well.

IMO "appropriate remedies" are only likely to be in reference to recovery of any costs incurred by Transocean, rather than contracted dates.

On the other hand, we still have 3 weeks left for "July09" and there may be no problem at all.

Just have to wait for further information to be released."

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That is, the problem was known BEFORE drilling started.
Since then the "claims" problem obviuosly has not been resolved, however, it is hard to see how this could interrupt K-1 drilling, or the future 2 additional wells.
The arguement is about money, not contracted dates.

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On 12th August, I posted (4352320) :-

"GD

You are correct - total of 8 wells.

The Ann of 17 June 09 stated:-

"The final terms of the contract have allowed the Joint Venture to secure the Transocean Legend for a minimum term of 148 days which will allow the drilling of the upcoming Kontiki-1 well together with the Poseidon-2 appraisal well, plus;
• One option for up to 2 additional wells to be exercised by 31st August 2009.
• Four options, each to drill one well, to be exercised prior to the end of the drilling
contract and subject to mutual agreement between the parties".

IMO the most significant part of this contract is that KAR must take up the option for the first 2 additional wells "BY THE 31ST AUGUST 2009".

K-1 is unlikely to be completed by 31/8, so the decision must be going to be made on the outcome of further investigation into the P-1 drilling results.

If the first option is taken up, this will be a big call and very positive for KAR sp."

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As indicated in that post, the important point was that "K-1 is unlikely to be completed by 31/8".

Hence it was always known that the decision on the 2 additional wells had to be made before K-1 results would be available.

Nothing seems to have changed IMO, and no doubt the decision on the 2 additional wells would have already been made and an Ann. will be forthcoming.

This Ann. may be held over until K-1 shows some positive results, and then the precise location of the 2 additional wells can be determined more confidently.

Then again - KAR may make some sort of statement at the Good Oil Conference Presentation tomorrow!!

In any case, KAR is a HOLD!