Sarah Parker Musarra
BERMUDA – Sevan Drilling and COSCO will exercise a first six-month option to extend the deferral agreement of the deepwater DP Sevan Developer semisubmersible drilling rig, Sevan Drilling announced. The deferral will allow an extension from Nov. 1, 2015 to April 15, 2016.
Additionally, COSCO will refund $26.3 million, or 5% of the contract price plus associated interest to Sevan Drilling by Dec. 1, 2015. The final delivery installment has been amended to $447.1 million, representing 85% of the $526.0 million contract price. This can also be amended further upon the expiration of the option period.
The rig has been wrought with several delays. Sevan Drilling originally contracted COSCO in May 2011 to build Sevan Developer, based on its Sevan 650 cylindrical hull design. The rig, was to be marketed by Seadrill Ltd., and was originally scheduled for delivery in April 2014.
The original delay from April to October 2014 was due to “critical equipment delivery delays from subcontractors to COSCO’s yard,” Sevan Drilling said it its 2Q 2014 financial statement. The company also said at the time that it was considering the possibilities of cancelling the construction contract; negotiating a later delivery date; or warm-stacking the rig.
In October 2014, Sevan Drilling announced that the two parties agreed to extend the Sevan Developer standstill agreement into 4Q 2014 to “allow the parties more time to negotiate a later delivery date as alternative to contract cancellation. Construction of the unit continues to progress at the shipyard,” Sevan Drilling said in a statement.
COSCO said in October 2014 that the two companies agreed to defer delivery for 12 months with options exercisable at six-month intervals, to extend the delivery date up to a total of 36 months from Oct. 15, 2014.
On Oct. 15, 2015, the two companies agreed to delay the end of the first deferral period from Oct. 15 to Nov. 15, 2015 to allow for negotiations concerning the first six-month option period to continue. Sevan Drilling said that all other terms and conditions under the Oct. 15 deferral agreement, including termination rights, remain unchanged.