Billionaire John Fredriksen-owned offshore drilling company Northern Drilling has canceled another drillship order with South Korea's Daewoo Shipbuilding & Marine Engineering.
After canceling the order for the West Aquila drillship in August, citing delay of delivery as well as a repudiatory breach of contract, Northern Drilling has now canceled the order for the West Libra 7th generation ultra-deepwater drillship citing the same reasons as with the West Aquila cancellation.
Northern Drilling had signed agreements with DSME back in May 2018, to buy the two newbuilding 7th generation DP3 and ultra-deepwater capable drillships DSME, for $296 million each.
The two drillships were originally ordered in 2013 by Seadrill. Seadrill then in 2016 agreed with DSME for the deliveries to be delayed for 2018 and 2019, but it then in March 2018 canceled the contracts.
On August 27, Northern Drilling said that the contractual delivery date for the now-canceled West Libra had been in March 2021 and that "the company continues preservation and maintenance of the drillship until remaining items are completed by the shipyard."
It seems that the wait is over and that there won't be any delivery to Northern Drilling, a company founded in 2017 for the purpose of acquiring of offshore drilling rigs from distressed drilling contractors.
Refund claim
Similar to the West Aquila deal, Northern Drilling said Monday that it had, as part of the West Libra order with DSME, made advance payments of around $90 million. It will now claim a refund of the installment paid, plus interest and damages.
"If this claim is disputed, the company will seek an award via London arbitration in accordance with the terms of the contract as well as industry-standard procedures and timescales," Northern Drilling said.
The company also said that following the cancellation of the contract for the West Aquila drillship in August 2021, DSME initiated arbitration proceedings.
This is the third drillship delivery deal canceled by Northern Drilling with DSME.
Back in October 2019, Northern Drilling canceled a resale contract for the 7th generation ultra-deepwater drillship West Cobalt, which had been scheduled for delivery from DSME in 2021.
Northern Drilling said at the time the deal had been canceled for "various reasons including repudiatory breach of contract by DSME".
DSME then challenged Northern Drilling's move, and according to available info, it in December 2019 purported to terminate the contract owing to the drilling firm's alleged failure to pay the remaining installments and for its breach of contract.
The yard reportedly said at the time it would pursue its legal and contractual rights in full, including its right to recover substantial damages.
Northern Drilling said earlier this year that the West Cobalt dispute was "not expected to be resolved in the near future."
The company had paid installments of $49.2 million at the time of rescission and further installments of $300.8 million would have become payable to DSME under the resale contract.
West Cobalt, previously known as Cobalt Explorer, was originally ordered by Vantage Drilling for scheduled delivery in 2015, but the order was canceled. Northern Drilling had exercised a $350 million option to acquire the drillship in April 2019.
With the cancellation, Northern Drilling now does not have any drilling rigs in its fleet. It used to own two semi-submersible drilling rigs, West Mira and West Bollsta,but these were last year transferred to a spin-off company called Northern Ocean.
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