Sevan Drilling has agreed a "standstill" arrangement with Cosco (Qidong) Offshore over its drillship, the Sevan Developer.
Significant delays in the build of the new deepwater drilling facility, and a drop in the market for deepwater units, led Sevan to consider its options over the rig, including cancelling the contract or negotiating a later delivery date. "Negotiations with Cosco continue and the company expects to conclude in the coming weeks," said Sevan.
Image: Sevan Drilling's Sevan Louisiana.
The contract delivery date for Sevan Developer had been 30 April 2014. As at 27 August, Cosco's latest indicated date of delivery was October 2014. Sevan said the main reason for the delay was significant delays in the delivery of critical equipment from Cosco's sub-contractors to the yard. But, the firm has also said marketing Sevan Developer was a "short term challenge."
"The soft ultra-deep water market resulting from the pause in spending and subsequent lack of awards from oil companies continues to delay obtaining an operating contract for the rig," said Sevan on 27 August. "The company believes the long-term fundamentals of the ultra-deep water market remain robust, but the short-term will continue to be challenging well into 2015."
Sevan said it could cancel the contract. It could also negotiate a later date of delivery with Cosco, in anticipation of an improvement in the market.
However, Sevan said: "Given the current market it is doubtful whether a sufficiently long delay in the delivery date can be agreed on satisfactory terms. Taking delivery with no employment secured will require the rig to be warm stacked until a contract is concluded. This will, necessarily, have a negative impact of the company's liquidity position."
The Sevan Developer's design is the same as Sevan Drilling's other cylindrical design rigs, a Sevan 650. It is designed to work in up to 3000m water depth, and 12,000m drilling depth. It is 86m long and 75 wide at the water line. The unit has accommodation for 150 people, DP3, 150,000bbl oil storage, two deck cranes, max. capacity 100-tonne at 15m, and 5700sq m deck area. The riser tensioning system is DAT - 3200kips, with 1000-ton drilling lifting capacity and 1000-tonne set back load.