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Seadrill delays newbuild deliveries for two drillships and eight jack-ups

Seadrill delays newbuild deliveries for two drillships and eight jack-ups
The challenging operating environment in the offshore oil and gas market has pushed Seadrill to delay 10 of its newbuild deliveries, including two drillships and eight jack-ups, all of which are currently under construction at China and South Korean yards.

Seadrill, in its latest financial results announcement, pointed out that it has deferred the deliveries of two drillships – West Draco and West Dorado – from the third and fourth quarter of 2015 to end of the first quarter of 2017. The drillships are being built at Korea's Samsung Heavy Industries (SHI).

Additionally, the expected 2015 deliveries of eight jack-ups have been amended, deferring one unit to the end of December this year, five units to 2016 and two to 2017. China's Dalian Shipbuilding Industry Company (DSIC) is building all the jack-ups.

“Discussions with shipyards are ongoing in regards to the delivery dates for the remaining units,” Seadrill said. The company currently has 15 rigs under construction, consisting of four drillships, three semi-submersibles and eight jack-ups.

Excluding the two drillships and eight jack-ups already delayed, the remaining two drillships are built at Daewoo Shipbuilding & Marine Engineering (DSME), and three semi-submersibles separately being built at Hyundai Heavy Industries, Jurong Shipyard and Cosco shipyard.

“The low commodity price environment, reductions in oil company spending plans and an increasing supply/demand imbalance for drilling units all continue to have a negative impact on utilisation and pricing in all market segments,” Seadrill commented.

“As expected, dayrates for new fixture activity remains at, or below, cash flow breakeven levels for both the floater and jack-up markets.

“Seadrill continues to believe that this challenging market will continue through 2016 and that visibility for 2017 and beyond is dependent upon commodity price stability, oil companies realising the benefits of their capital spending rationalisation programs and continued fleet attrition,” it added.

Meanwhile, the company posted a first half net profit of $806m, a sharp drop from $3.67m recorded in the previous corresponding period which benefitted from a $2.34m gain on deconsolidation of Seadrill Partners.

Revenue in the first six months was largely stable at $2.39bn compared to $2.44bn in the year-ago period.

During the second quarter, Seadrill owned 19 floaters and 19 jack-ups deployed globally. It also managed 11 Seadrill Partners rigs comprised of eight floaters and three tender rigs, and five jack-up rigs owned by the SeaMex joint venture.

Seadrill also managed two tender rigs owned by Malaysia’s SapuraKencana.