Seadrill has received a notice of termination from Pemex for the West Pegasus drilling contract, effective 16 August 2016.
Seadrill says it has disputed the grounds for termination and is reviewing its legal options.
During Q2 2015, Seadrill signed a provisional commitment for a two-year extension to the contract with Pemex for the West Pegasus, a semisubmersible drilling rig.
In conjunction with the extension, the dayrate for the remaining term of the initial contract was reduced, says Seadrill. The extension of the contract was finalized during Q1 2016.
As part of this agreement, Seadrill and Seamex, Seadrill's 50% owned joint venture with Fintech, agreed to reduce the dayrate on five jackups for a period of 365 days.
The agreement to reduce the dayrates of the existing contracts was contingent upon final confirmation of the two year extension of the West Pegasus by Pemex management, says Seadrill.
In the event of termination, Seadrill and Seamex are entitled to recover the dayrate concessions as well as the demobilization for the West Pegasus, according to Seadrill.