Chicago: Transocean Inc, the world's largest offshore oil driller, cancelled a record $550,000-a-day rig lease and said a second vessel has been idled after the client ran out of cash.

Transocean disclosed the termination of its contract with Burgundy Global Exploration Corp yesterday in the monthly fleet-status report on its website.

Calgary-based Oilexco Inc halted operations aboard Transocean's Sedco 712 rig after its North Sea subsidiary sought protection from creditors, the report said.

Transocean also said a $170 million (Dh625.26 million) deal to sell the Nordic rig to Kuwait-based Gulf Petroleum Investment S.A.K.C., known as PetroGulf, was terminated. Oil companies are having difficulty borrowing money to lease rigs and hire roughnecks after crude tumbled 74 per cent the past six months and global credit markets seized up, said Truls Olsen, an analyst at Fearnley Fonds AS.

"We will likely see more of this," Olsen, who rates Transocean shares a "buy" and doesn't own any, said yesterday in a telephone interview from Oslo. "Counterparty risk is on the increase. It's a matter of whether or not you are able to raise cash."

Oilexco demobilised the Sedco 712 rig on January 5, two days before a London court appointed administrators to oversee operations of the company's North Sea unit. The $340,000-a-day contract for the rig, that runs through March 2010, "remains in full force and effect," said Transocean, based in Geneva and run from offices in Houston, in yesterday's report.

"Credit's tight and times are tough," said Michael Drickamer, an analyst at Morgan Keegan and Co. in Memphis, who rates Transocean shares "outperform."

Burgundy, based in Makati City, Philippines, agreed last month to lease Transocean's C. Kirk Rhein Jr. rig to search for oil in Filipino waters. The contract represented a 52 per cent increase from the previous rate and the first time that type of rig commanded more than $500,000 a day.

Transocean said it was pursuing "appropriate remedies" against Burgundy and Oilexco, without elaborating.

A telephone call to Burgundy's corporate office after normal business hours was not answered. Transocean spokesman Guy Cantwell declined to comment beyond the fleet-status report.

South African energy producer Sasol Ltd's current $362,000-a-day contract to use the Rhein rig off the coast of Mozambique expires this month.

The Rhein is in a class of rigs known as midwater floaters that can operate in seas 1,000 feet (305 metres) to about 4,000 feet deep. The Rhein, built in 1976 and refurbished in 1997, can bore wells 25,000 feet below the surface of the ocean.

The Sedco 712 is a 26-year-old vessel that can operate in 1,600-foot waters and drill to 25,000 feet.

PetroGulf, a technical-services provider to oil and natural gas producers, agreed in May 2008 to buy the Nordic, a so-called jack-up rig with retractable legs that can extend to the seafloor.