The West Mira drillship. Image courtesy of Seadrill.

Seadrill Limited said Tuesday it has cancelled its construction contract for the West Mira drilling unit after months of delivery delays.

The company has notified Hyundai Heavy Industries Co Ltd. that it has exercised its right to cancel the construction contract for the West Mira, a sixth generation ultra-deepwater harsh environment semisubmersible drilling unit.

The unit was ordered during the second quarter of 2012 with delivery scheduled by December 31, 2014.

“Due to the shipyard’s inability to deliver the unit within the timeframe required under the contract, the Company has exercised its cancellation rights,” Seadrill said.

Under the contract terms, Seadrill can recoup the $168 million in pre-delivery installments it paid to the shipyard, plus accrued interest.

In the fourth quarter of 2012, Seadrill was awarded a five year contract for the West Mira with Husky Oil Operations Limited for operations in Canada and Greenland.

In Seadrill’s second quarter earnings report the company said it had reached a tentative agreement with Alberta-based Husky to reduce the dayrate for the West Mira due to the late delivery of the unit.

Seadrill said it remains in discussions with Husky to find an alternative solution to meet its drilling requirements.


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