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Seadrill CEO Fredrik Halvorsen. Image courtesy of Acano/Youtube.

Services player Seadrill saw its third quarter net income tumble 40 percent over last year as weak oil prices reduces demand for rigs.

The Bermuda based company’s stock fell by nearly ten points after the company announced Wednesday that it will be suspending dividends for an undisclosed period.

Seadrill booked a net income of $190 million during the third quarter.

The company had paid out dividends of about $1 per share during the first two quarters of the year.

Seadrill said its existing backlog could sustain the previous dividend level but near term challenges in the offshore market will put pressure on profit margins.

The suspension is expected to boost the company’s capital position by about $2 billion per year.

A projected timetable to reinstate dividend payments was not disclosed but the company said it could buy back up to 10 percent of its shares if market conditions during the next year permit it.

Seadrill and its subsidiary North Atlantic Drilling have also taken hits from western sanctions against Russia and slumping dayrates.

The company was forced to suspend a $4.25 billion offshore rig contract with Rosneft for North Atlantic’s West Alpha rig that was slated to start in 2015.

“We continue to advance discussions on our agreement with Rosneft,” Seadrill said.

ExxonMobil said it is looking for alternative assignments for the rig, Bloomberg said.

Cutbacks by upstream players and a glut of available new vessels have also depressed dayrates.

“With approximately 25 percent of the (global) ultra-deepwater fleet available in 2015, certain rig owners seem willing to work at or close to cashflow break-even rates and we expect this type of activity to continue in the short term,” Seadrill said.

Dayrates have fallen by about $250,000 since 2013, Reuters said.

Seadrill currently has 16 rigs under construction and still owes $4.7 billion for yard payment installments.