Seadrill Cancels West Mira Construction Contract

Frankly, anything to reduce the company’s exposure to newbuilds over the next year – considering that offshore drilling isn’t expected to improve anytime soon – is probably the best path for the company to take right now.

Seadrill was awarded a five year contract for the West Mira with Husky Oil in back in late 2012.

Investors have welcomed Seadrill’s decision to cancel the contract for West Mira, as the company’s stock is trading 5.26% higher today at $6.80, as of 10:24 AM EDT.

In a statement, the offshore drilling firm said, ‘Seadrill remains in discussions with Husky to find an alternative solution to meet its drilling requirements’.

Husky was responding to news released yesterday concerning the cancellation of the contract to build a new semsubmersible drilling unit. However, the company added that it will recoup those payment and interest.

Additionally, Seadrill has said it hopes to save $500 million this year through reduced or postponed spending amid a challenging rig market, MarketWatch reports. Preserving cash and having financial flexibility are the prime concerns for the majority of energy sector players right now. Ltd. for the construction of the West Mira rig due to delayed delivery.

Seadrill Limited (Seadrill or The Company), disclosed Tuesday that it has notified South Korea’s Hyundai Heavy Industries Co. A contract backing is a luxury in the current times for newbuilds.

With that said, the worst-case scenario is Seadrill being in basically the same shape as before the cancellation, with the upside that it can work something out with Husky on one of the other newbuilds.

“We rate SEADRILL LTD (SDRL) a HOLD”.

What’s happening: Shares of offshore oil and gas driller Seadrill, Ltd.