Sevan Drilling, an international drilling contractor, has exercised its first option to delay delivery of its newbuild rig, the Sevan Developer, being built at China’s COSCO shipyard.
Namely, on Friday, October 30, Sevan and COSCO exercised the first six-month option to extend the deferral agreement to April 15, 2016.
Further, under the agreement COSCO will refund $26.3 million, or 5% of the contract price, plus associated interest to Sevan Drilling by December 1, 2015. The final delivery installment has been amended to $447.1 million, representing 85% of the $526 million contract price and can be amended further upon the expiration of the option period.
To remind, Sevan Drilling entered into an agreement with COSCO for the construction of Sevan Developer in May 2011. The rig, of cylindrical hull design, was originally scheduled for delivery in the third quarter of 2014.
In 2014, as the rig delivery from the shipyard was delayed and the offshore driller failed to obtain a contract for it, Sevan contemplated whether to cancel the contract or agree with COSCO to delay it some more. Since taking the delivery of the rig before the contract is secured would have meant warm-stacking it, Sevan Drilling opted for another way out.
Thus, in October 2014, the drilling contractor and the shipyard agreed to delay the delivery of the rig. Under that agreement, the delivery was deferred by a year with mutually agreed options, exercisable at 6-month intervals, to extend the delivery for up to a total of 36 months from October 15, 2014. The agreement would terminate at the end of each deferral period, unless the option to extend was mutually agreed by both parties.
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