A Brazilian appellate court ruled that state-owned Petrobras illegally canceled a contract with Diamond Offshore Drilling, offering a financial reprieve to the Houston company.
The court upheld an injunction ruling that the scandal-plagued and financially struggling Petrobras couldn’t cancel its offshore drilling contract with the Ocean Valor deepwater rig. Petrobras can still appeal to a higher court.
Petrobras had sought to cancel the contract back in August. The deal pays Diamond $455,000 a day through October 2018. Raymond James analyst Praveen Narra called it a surprising ruling that would give Diamond a significant financial boost through most of next year.
The ruling especially helps Diamond because the offshore drilling sector is continuing to struggle through the oil bust with only the onshore U.S. shale sector currently demonstrating meaningful recovery.