Seadrill, the London-based listed company in the centre of John Fredriksen’s drill ship and rig operations, said in a statement it has received a notice of termination of a contract worth up to USD1 billion from Husky Oil Operations.
Husky was due to hire the West Mira rig for up to five years, but this contract has now been cancelled as delivery of the rig has been behind schedule.
“In the fourth quarter of 2012 Seadrill was awarded a five-year contract for the West Mira with Husky for operations in Canada and Greenland. The total estimated base revenue potential was approximately USD1 billion. As stated in the company’s second-quarter 2015 earnings report, due to the late delivery of the unit, the company had tentatively agreed with Husky to reduce the dayrate on the West Mira,” Seadrill said.
The construction contract was subsequently cancelled by Seadrill because of the shipyard’s inability to deliver the unit within the timeframe required under the contract. “Seadrill remains in discussions with Husky to find an alternative solution to meet its drilling requirements,” the company said.
On 15 September, Seadrill said it had notified Hyundai Heavy Industries that it has exercised its right to cancel the contract for the construction of the West Mira, a sixth-generation ultra-deepwater, harsh environment, semisubmersible drilling unit.
“The unit was ordered during the second quarter of 2012 and the delivery date stated in the construction contract was by 31 December 2014. Due to the shipyard’s inability to deliver the unit within the timeframe required under the contract, the company has exercised its cancellation rights,” Seadrill said in a statement.
Under the contract terms, Seadrill has the ability to recoup the USD168 million in pre-delivery instalments to the shipyard, plus accrued interest, it added.