Stone Energy Corp. (NYSE: SGY) said June 29 it has agreed to terminate its long-term deepwater rig commitment with Ensco Plc (NYSE: ESV) in the Gulf of Mexico.

As part of the contract termination, Stone will pay Ensco about $20 million. About $5 million of that amount was a deposit previously provided to Ensco pursuant to the drilling services contract, according to a press release.

In addition, Stone has agreed to provide Ensco the opportunity to perform certain drilling services commenced before year-end 2019. The company also 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 contract was at a day rate of $341,000 and was scheduled to expire in August 2017, the release said.

The termination of the Ensco contract has eliminated a long-term obligation, which provides Stone with additional financial flexibility, said David Welch, the company's chairman, president and CEO. Stone Energy is headquartered in Lafayette, La.