Half Built Offshore Rig Still Giving Seadrill Headaches

Published at 09:45AM - 23/09/15

Canada’s Husky Oil, has cancelled its contract held with offshore drilling contractors Seadrill. 

The move by Husky, is a continuation of the fallout from the West Mira offshore drilling rig debacle, and a growing headache for Seadrill.

Drilling Contract

The contract was for a 5 year lease of the West Mira, a 6th generation ultra deepwater offshore semisubmersible drilling rig, being built by Hyundai Heavy Industries in South Korea.

Signed in the 4th quarter of 2012, the total backlog came in at around US$1 billion, with drilling due to start in the 1st quarter of 2015.

Shipyard Delays

The build of the drilling rig has continued to be dogged by delays, its original delivery date was 31st December 2014.

With the West Mira clearly not going to be on location inline with the Husky contract, Seadrill ‘tentatively’ agreed to reduce the drilling rig’s day rate.

Although this initially kept Husky on side and stopped them from cancelling the contract, it had a huge impact on both Seadrill’s profits and the West Mira’s feasibility.

With the delays ongoing, the delivery of the West Mira nowhere in sight, Seadrill cancelled the build the rig on the 15th September 2015, as reported by Offshore Post.

Seadrill had been in negotiations with Husky, over the last week, on a possible hire of an alternative rig.  However, the outcome of those negotiations was for Husky to cancel the contract completely and walk away.

The move by Husky will be hard for Seadrill to swallow.  Not only have they lost money millions on the West Mira build, but now a US$1 billion contract, all due to forces out of their control.

With offshore drilling rigs continually being stacked, and the current offshore drilling industry at it lowest in decades, the news couldn’t have come at a worse time.