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Seadrill cancels drill rig order

|About: Seadrill Limited (SDRL)|By:, SA News Editor

Seadrill (NYSE:SDRL) +3.1% premarket after saying it has canceled its order for the West Mira ultra-deepwater semi-submersible rig, now in the late stages of construction in South Korea.

The rig was scheduled to arrive in offshore Newfoundland early in 2016 as part of a five-year contract with Husky Energy (OTCPK:HUSKF) for operations in Canada and Greenland, but SDRL exercised its cancellation rights "due to the shipyard's inability to deliver the unit within the timeframe required under the contract."

The rig was ordered in Q2 2012, and the delivery date scheduled in the construction contract was Dec. 31, 2014; because the shipyard did not deliver the rig on time, SDRL is able to recover the $168M in pre-delivery installments it already paid, plus interest.

The cancellation leaves just two drill rigs, both owned by SDRL, now operational offshore Newfoundland, and industry insider Terry Childs is not ruling out the possibility the number may be reduced to zero within a year or two.

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