Pemex terminates rig contract with Seadrill. Driller evaluating legal options

Mexican oil company Pemex has terminated a drilling contract with Seadrill over the West Pegasus offshore drilling rig.

The driller has disputed the grounds for termination and is reviewing its legal options.

During the second quarter of 2015 Seadrill signed a provisional commitment for a two-year extension to the contract with Pemex for the West Pegasus.

In conjunction with the extension, the dayrate for the remaining term of the initial contract was reduced. The extension of the contract was finalized during
the first quarter of 2016.

As part of this agreement, Seadrill and Seamex , Seadrill’s 50% owned joint venture with Fintech, agreed to reduce the dayrate on five jack-ups for a
period of 365 days. The agreement to reduce the dayrates of the existing contracts was contingent upon final confirmation of the two-year extension of
the West Pegasus by Pemex management, Seadrill said.

The driller further said that in the event of termination, Seadrill and Seamex are entitled to recover the dayrate concessions as well as the demobilization for the West Pegasus. In addition, Seadrill will seek reimbursement of certain costs incurred in anticipation of the extension, the company added.