Seadrill contests Pemex rig contract termination

Seadrill Ltd. says it’s disputing the grounds for termination of the West Pegasus semisubmersible drilling rig contract by Pemex Exploracion y Servicios, and “is reviewing its legal options.” Pemex submitted a notice of termination to Seadrill effective Aug. 16.

Seadrill says it signed a provisional commitment for a 2-year contract extension with Pemex during second-quarter 2015. 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 this year’s first quarter.

As part of that agreement, Seadrill and Seamex Ltd., a 50-50 joint venture with Fintech Advisory Inc. (Fintech), agreed to reduce the dayrate on five jack ups for a period of 365 days, Seadrill says. The dayrate reductions of the existing contracts were contingent upon final confirmation of the 2-year extension of West Pegasus by Pemex management.

In the event of termination, Seadrill and Seamex are entitled to recover the dayrate concessions as well as the demobilization for the West Pegasus, Seadrill says, adding that it also will seek reimbursement of certain costs incurred in anticipation of the extension.

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