Seadrill Cancels West Mira Construction Contract

Offshore drilling company Seadrill Limited said it has exercised its right to cancel the contract for the construction of the West Mira drilling unit following builder Hyundai Heavy Industries Co Ltd.’s inability to complete the project on deadline.

West Mira, a sixth generation ultra-deepwater harsh environment semisubmersible drilling unit, was ordered during the second quarter of 2012 and was supposed to be delivered at or before December 31, 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 press release.

The contract’s terms allow Seadrill the ability to recoup the $168 million in pre-delivery installments to the shipyard, plus accrued interest, the company said.

Seadrill was awarded a five-year contract in the fourth quarter of 2012 for the West Mira with Husky Oil Operations Limited for operations in Canada and Greenland, but tentatively agreed with Husky to reduce the dayrate of the West Mira drilling contract due to its late delivery.

Seadrill said it remains in discussions with Husky to find an alternative solution to meet its drilling requirements.