BP terminates drilling rig contract with Seadrill Partners

British oil giant BP has terminated a contract for the West Sirius semi-submersible drilling rig, owned by Seadrill Partners.

In a statement issued today, Seadrill said the termination would become effective by early May 2015, following the rig completing the current well and demobilization. The rig is operating in the U.S. Gulf of Mexico.

Prior to the cancellation notice, the dayrate and term for the West Sirius and West Capricorn contracts were swapped.

The West Sirius dayrate was decreased by $40,000 per day and the term was decreased by two years to expire in July 2017 while the dayrate for the West Capricorn was increased by $40,000 per day and the term was extended by two years to expire in July 2019.

Amortized payments for the West Capricorn such as mobilization and upgrades will continue on the original schedule ending in July 2017. In accordance with the cancellation provisions in the West Sirius contract, Seadrill Partners will receive payments over the remaining contract term, now expiring in July 2017.

As a result of the termination, Seadrill Partners’ backlog will decrease by approximately $160 million.

“After taking into consideration the expected decrease in operational expense while the unit is cold stacked, and the fact that termination fee payments will not be impacted by downtime, Seadrill Partners does not expect a material impact on its cash flow position over the contract period through July 2017,” the drilling contractor said in a a statement.

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