Sevan Drilling, Cosco in talks to delay rig delivery

Norwegian drilling contractor Sevan Drilling needs more time to decide on the Sevan Developer rig fate.

The company has today announced that it has agreed with Cosco, the rig builder, to extend the Sevan Developer standstill agreement into the fourth quarter. The agreement should allow the parties more time to negotiate a later rig delivery date as an alternative to contract cancellation. Construction of the rig continues to progress at the China-based shipyard.

To remind, Sevan Drilling in August said that marketing the Sevan Developer drilling unit continued to be a short term challenge for Sevan Drilling and said it was looking at a later delivery date, hoping for an improvement in the market.

In May 2011, Sevan Drilling entered into a contract with COSCO for the construction of Sevan Developer, based on the same design as other Sevan Drilling rigs. According to information on the company’s website, the Sevan Developer, under the original plan, was scheduled for delivery in the third quarter of 2014.

However, in its quarterly results statement Sevan Drilling said that that the soft ultra-deep water market resulting from the pause in spending and subsequent lack of awards from oil companies continues to delay obtaining an operating contract for the rig.

The drilling company also said that, looking at the current situation in the market, it is “doubtful whether a sufficiently long delay in the delivery date can be agreed on satisfactory terms.”

“Taking delivery with no employment secured will require the rig to be warm stacked until a contract is concluded. This will, necessarily, have a negative impact of the company’s liquidity position.” Sevan Drilling said in its update back in August.