Seadrill cancels West Mira rig construction contract

Seadrill Ltd. has notified Hyundai Heavy Industries Co. Ltd. that it has exercised its right to cancel the contract for construction of West Mira—a sixth generation ultradeepwater, harsh environment, semisubmersible drilling unit—given the shipyard’s inability to deliver the unit under the specified timeframe.

The unit was ordered during second-quarter 2012, and the delivery date stated in the construction contract was by Dec. 31, 2014. Under the contract terms, Seadrill has the ability to recoup the $168 million in predelivery installments to the Shipyard plus accrued interest.

Seadrill in fourth-quarter 2012 was awarded a 5-year contract for West Mira with Husky Oil Operations Ltd. for operations in Canada and Greenland. Due to the late delivery of the unit, the company had tentatively agreed with Husky to reduce the dayrate of the West Mira drilling contract. Seadrill remains in discussions with Husky to find an alternative solution to meet its drilling requirements.