U.K.-based Ensco said this week in a filing with the Securities and Exchange Commission that its customer, Brazil state-owned oil and gas company Petrobras, cancelled its contract for a drilling services contract because of alleged irregularities with respect to contracting prior to the company’s acquisition of Pride International in 2011.
Ensco said the alleged irregularities involved a former third-party marketing consultant of Pride to provide services in connection with the DS-5 drilling services contract.
On Jan. 4, Ensco received a notice from Petrobras asserting that Petrobras believes the DS-5 drilling services contract is void. According to Ensco, “without specifying any supporting facts or conduct, Petrobras’ notice alleges that Pride had knowledge that the shipbuilder of DS-5 made improper payments to the former third-party marketing consultant who then shared the improper payments with former employees of Petrobras and that Pride may have assisted in or facilitated these improper payments.”
Ensco denied the allegations. It noted in a prior disclosures that it has conducted regular compliance reviews related to its business with Petrobras, and its audit committee engaged independent counsel in June 2015 to lead an investigation into alleged irregularities involving Petrobras.
“Contrary to Petrobras’ assertion, the company has found no evidence that any current or former employee of Pride or Ensco was involved in any wrongdoing, had knowledge of any wrongdoing, or authorized the former third-party marketing consultant to engage in any wrongdoing on behalf of Pride or Ensco with respect to the shipbuilding contract for DS-5,” the company said.
Ensco added that it has not been contacted by other Brazil governmental authorities regarding alleged wrongdoing by Pride or Ensco or any current or former employees. It further said it “intends to assert its legal rights under the drilling services contract.”