Pride International said it agreed with Chevron Corp to terminate the remaining contract term of a rig in West Africa, after an inspection revealed “unacceptable” levels of corrosion. 

The rig, Pride Venezuela, was relocated from Chevron’s drilling location to Luanda Bay, Angola for planned repairs and a mid-period survey in March, Pride said. An inspection of a section of the hull revealed an unacceptable level of corrosion, which will require a dry-dock facility to conduct permanent repairs. The rig will have to be moved out of the region as no dry-dock facility exists in Africa for a semisubmersible rig, the company added. As to why the company delayed this announcement, Jefferies and Co analyst Judson Bailey said, “My guess would be they have been negotiating with Chevron to settle this amicably.” “Its disappointing but it sounds like there are some problems with the rig and Chevron is obviously within their rights to cancel the contract given the extensive nature of the repairs that have to be done,” Bailey said.