Awilco bracing for cost-cutting measures following rig order cancellation and delay
Offshore drilling contractor Awilco Drilling is preparing for cost-cutting measures amid a challenging environment in the offshore drilling market.
Awilco Drilling said on Monday that, in light of the termination of the newbuild Nordic Winter and the significant delay in the construction and anticipated start-up of operations of the newbuild rig Nordic Spring, cost saving will be required.
Based on this situation, Awilco Drilling Norge has decided to initiate a wide range of cost-reducing measures.
The rig owner has not provided any more details regarding these measures but only added that further information will be provided in due course.
Awilco exercised its contractual termination right under a newbuilding contract with Keppel FELS for the construction of a semi-submersible drilling rig, Nordic Winter, in early June 2020.
The drilling contractor cited breaches under the rig construction contract as a reason behind the termination.
Following the termination, Keppel denied the allegations and rejected Awilco’s termination.
Later in June, Keppel started an arbitration process to resolve the dispute with Awilco Drilling related to the termination of the Nordic Winter construction contract.
Awilco maintained its position that it had validly terminated the contract and maintained its entitlement to the instalments.
The Nordic Winter was one of the two semi-submersible drilling rigs of Moss Maritime CS60 Eco MW design ordered by Awilco Drilling subsidiaries from Keppel FELS.
While the first rig order was cancelled, Awilco said back in August that there would be a delay in the delivery of the second rig, the Nordic Spring, due to the Covid-19 pandemic.
However, the yard was unable to quantify this until the Covid-19 situation is under control and work is fully resumed in Singapore.
The rig is scheduled for delivery in March 2022.
Awilco also said in August it was exploring all viable financing alternatives for the financing of the rig.
The next payment to the yard for the Nordic Spring rig is approx. $42 million and it is scheduled for March 2021.