Sevan Drilling Extends Chinese Rig Delivery Deferral Period

sevan-drillingOffshore drilling contractor Sevan Drilling has amended the delivery deferral period for the Sevan Developer until June 30, 2020.

Sevan ordered the cylindrical rig from Chinese shipbuilder Cosco (Qidong) in 2011. The rig was originally scheduled for delivery in the third quarter of 2014.

However, as the owner was unable to secure the contract for its new rig in a market overflowing with drilling rigs, the ready-for-delivery rig has been warm-stacked ever since it was built. The delivery has been deferred several times.

At the end of May 2017, the delivery deferral agreement for the Sevan Developer was further deferred until June 30 in order to complete negotiations.

Following the expiry of this period, the driller informed on Wednesday that the new, amended agreement is effective upon receipt of $25.3 million plus interest from the Chinese rig builder, which is expected by July 31, 2017.

During the extended delivery deferral period, Sevan may continue marketing the rig for an acceptable drilling contract where financing could be secured to allow delivery.

Cosco now has the option to terminate the deferral period agreements on July 1, 2018, and again on July 1, 2019, which would require Cosco to refund the remaining $1 million investment balance to Sevan.