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Seadrill’s outlook has turned somber on prospects for the global drilling market, and the company expects falling charter rates as oil firms cut capital spending to maintain margins.

Oil companies have been cutting costs following a capital surge that lasted nearly a decade.

“It was not expected that activity would come to a virtual halt while oil companies worked through their forward budgeting process,” Seadrill said in a statement on Wednesday.

The company expects rates for new-generation vessels to fall to $425,000-$475,000 per day, well below their peak around $650,000 per day last year.

Falling day rates could hit Seadrill hard as it has five rigs without contracts from this year and seven new-builds without contracts in 2014 and 2015.

The Bermuda domiciled company is the world’s largest offshore rig firm based on market capitalization of $17.6 billion.