Oslo-listed Sevan Drilling is considering not taking delivery of a newbuild rig from China due to the current downturn in the ultradeepwater sector.

For the short term, Sevan says its main challenge is finding a contract for the newbuild Sevan Developer, which it has been marketing so far for nine months worldwide without success.

Echoing the sentiment expressed by Maersk, Sevan declared: “The market is currently characterized by a very limited number of opportunities in the ultra-deepwater segment. This is a direct consequence of the pause in spending on exploration by several oil companies,” it outlined in its first quarter results. “While the company believes the market will improve in the medium to long term it is clear that the short term is very challenging.”

Currently the Sevan Developer is due to be delivered from the Cosco shipyard in China during the third quarter of this year. Delivery is already late, due to delays in the arrival of equipment from Cosco’s subcontractors.

And Sevan is in no hurry to accept the new unit: “Sevan Drilling retains the option of not taking delivery of Sevan Developer and will consider this as the delivery date approaches.”

However, the company says this could mean taking a financial hit: “Not taking delivery will mean that the final instalment will not be funded to the subsidiary holding the contract, whereafter it will default on the contract and the group will lose the amount invested in the rig until such date. This is currently estimated at approximately US $134.7 million.”

Sevan has a total of four units based on its circular hull design: the Sevan Driller and Sevan Brasil continued contracts with Petrobras in Brazil in the first quarter with 93.8% and 89.9% technical utilization in the period. The Sevan Louisiana arrived in US Gulf of Mexico on 17 April and mobilized for a three-year contract with LLOG.

  • Sevan has reorganized its company structure as of early May with Sevan Brasil and Sevan Driller transferred from Singapore to a new Bermuda subsidiary, while Sevan Louisiana has transferred to a Hungarian subsidiary. Also the company is considering moving the parent company from Norway to Bermuda.