Hi Numbers et. al., I'm not sure I should be "thanked" if all I...

Hi Numbers et. al.,

I'm not sure I should be "thanked" if all I have added to is the never ending vortex of confusion. (But it does provide the occasional and necessary diversion from my primary day-to-day obligations).

Some big "ifs" here. But let's look at the potential size of the rig contract liability. The last fact I have is from an Ocean Rig prospectus dated 14 April 16 which stated that ORA was earning a day rate of US$706,026 as at 6 April 2016. This was while they were drilling SNE 4 which was subsequently P&A'd 22 May 16. We will never know the exact details of the contract, but there are always several 'day rate' classifications, depending on what the rig is actually doing. Full blown drilling ops is the highest so the figure quoted above is the max...and not what COP would have been stung with while the ORA stood down in Las Palmos.

My guess is that COP would have moved the operational status down to to the lowest classification as quickly as possible: a Cold Hold but still would have been up for US$300-350k/d (my guess). It may have been on a Hot Hold for 2-3 weeks before the op and maintenance crews were demobbed for an est $500-550k/d. The contract was terminated under agreement with Ocean Rig on 10 Feb 17....only 6-7 weeks before the final 3 year contract was up. So we have about 18 days at $500-550k/d and about 260 days at about US$325k/d (till end of contract).

All up, COP would have had about US$95-100m of (let's just call it US$100m) to go on the contract. I strongly doubt that Ocean Rig would have let COP get away with any material discount (itself under provisional liquidators at the time). But they did settle a bit early so lets give them a US$5m discount...but lets still call it US$100m anyway.

But my main point is....even if this was tucked away in the BV vehicle....its not really that big. It would take WPL's net purchase price up from US$2.20 to only US$2.70/bbl....if that liability did, indeed, come with it. It is my understanding that COP negotiated the termination and not WPL. So....

My other point is that ALL PSA's (Purchase and Sale Agreements) come with pretty solid indemnities for any possible unknowns. I'm sure they are several reasons why COP don't want to lift their shirts on the BV coy: tax, profit stripping of the Senegal sale, cross-border contra deals etc. No doubt, 10,000+ more posts for those hungry for conspiracies!

But we'd better own up to the reality that we will never know exactly what else, if anything, was left in the BV coy at the time.

We'll most likely to have to rely on a CNE sell-down to get the clean valuation benchmark that the market is so desperate to see.

But hell, we all know its worth more anyways....

Cheers,