Oil and natural gas exploration and production company Stone Energy has terminated a long-term deepwater rig contract with offshore drilling contractor Ensco.

Stone hired Ensco’s 2010-built drilling rig Ensco 8503 for the company’s multi-year deep water drilling program in the Gulf of Mexico in October 2014.

Stone and Ensco have now agreed to terminate Stone’s current contract with Ensco for total consideration of $20 million, approximately $5 million of which was a deposit previously provided to Ensco pursuant to the drilling services contract.

Further, Stone said it agreed to provide Ensco the opportunity to perform certain drilling services started before December 31, 2019, and Stone paid Ensco a $5 million deposit to be used as a credit against future drilling activities initiated before March 31, 2017, subject to extension in certain circumstances.

The Ensco 8503 deepwater rig’s contract was at a day rate of $341,000 and was scheduled to expire in August 2017.

Chairman, President and CEO David Welch, stated: “The termination of the Ensco contract eliminates a long term obligation, which provides Stone with additional financial flexibility.”