NEW YORK (TheStreet) -- Transocean (RIG) - Get Report stock is declining 6.91% to $7.95 in early afternoon trading on Wednesday after an Exxon Mobil Corp. (XOM) subsidiary decided to terminate an offshore drilling contract a month ahead of schedule.
Esso Exploration Angola's contract for the ultra-deepwater semisubmersible GSF Development Driller I, located off the coast of Angola, will end in May. The rig will be demobilized by June.
"In accordance with the terms of this contract, the company will not receive a payment compensating it for the remaining contract term," Transocean said in a statement.
If the rig remains idle, however, it could have a negative impact of 10 cents to 12 cents per share on earnings, RBC analysts said in a note, according to Barron's.
Earlier this month, Murphy Oil Corp. (MUR) canceled the contract for the ultra-deepwater drillship Discoverer Deep Seas, but Transocean received an undisclosed amount for the termination.
The Switzerland-based offshore drilling company will report its 2015 fourth quarter financial results this afternoon after the market close.
Separately, Transocean has a "sell" rating and a letter grade of D+ at TheStreet Ratings because of the company's generally disappointing stock performance and weak operating cash flow.
You can view the full analysis from the report here: RIG
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