Bermuda, 30 March 2016 - Reference is made to the Fourth Quarter Earnings Release on February 25, 2016, Sevan Drilling Limited ("Sevan Drilling" or the "Company") amended contracts for the Sevan Driller and Sevan Brasil with Petroleo Brasileiro SA ("Petrobras") and secured short-term employment for Sevan Driller in Brazil with Shell do Brasil ("Shell") commencing in the second quarter 2016.
In December 2015, the Sevan Driller contract was suspended by Petrobras as part of the ongoing commercial negotiations for both of Sevan Drilling's units employed with Petrobras. Today, Petrobras and Sevan Drilling executed an early termination of the Sevan Driller contract and reduction of the contract dayrate on the Sevan Brasil. The Company determined on balance that this was the preferred alternative to potentially having both contracts terminated and exposing the Company to a protracted legal challenge with an uncertain outcome. As a result, the Company was able to preserve $220 million of contracted revenue backlog for the Sevan Brasil contract and to allow the Sevan Driller to obtain alternative employment.
The Sevan Brasil contract dayrate has been reduced to US$250,000 per day effective 26 February 2016 through the remaining term of the contract, ending July 2018 and a portion of the dayrate continues to be denominated in Brasilian Reals. The Sevan Driller contract was mutually agreed to be cancelled effective from 1 December 2015.
Subsequent to the effective cancellation of the contact for the Sevan Driller, the unit has been awarded a well intervention contract by Shell in Brazil for 60 days with two 30 day options commencing in the second quarter of 2016, adding approximately US$11 million in revenue backlog. Daily operating cost is expected to be significantly lower as the rig will perform non-drilling activities for Shell.
As of 26 February 2016, the Company's total contracted revenue backlog is now estimated at $509 million, including the extension of the Sevan Louisiana contract amended in November 2014.
For further information, please contact:
Scott McReaken, CEO, Sevan Drilling Management AS
+47 91194651 mobile
About Sevan Drilling:
Sevan Drilling Limited is an international offshore drilling contractor specializing in the ultra deepwater segment. Sevan Drilling Limited is listed on Oslo Børs.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.