Seadrill's Drilling: A Case Study

Decent Essays
In addition, the firm has contract for the construction of additional 15 drilling units, which comprises 4 drillships, 3 semi-submersible rigs and 8 jack-up rigs. 4 drillships, 1 semi-submersible rig and 8 jack-up will be held by SeaDrill, while North Atlantic Drilling and Sevan Drilling will held 1 semi-submersible rig each. After completion of the contracts SeaDrill’s fleet will increase to 54 units on a sole basis and to 69 units combined with affiliated firms. Seadrill limited has a quite modern fleet with average fleet age of 5.90 (5 years 10 month 24 days) on a standalone basis, and average fleet age of 5.48 years combined with SeaDrill Partners and SeaMex. The table below comprises the firm’s average fleet age segregated by holding…show more content…
In order to achieve this objective, the firm constantly resupplies its stock. At the moment the firm holds contracts for the construction of additional 15 drilling units. Once completed, these units will substantially lower average age of the fleet. The effect of new drilling units is summarised in the table…show more content…
In 2014, SeaDrill’s limited 4 largest customers represented 56% of revenue, a 7% rise compared with 2012. According to the 2014 annual report of Seadrill Limited, 5 largest customers of the company account for approximately 63% of future contracted revenues (backlog). Due to the adverse economic conditions and SeaDrill’s limited customer base, SeaDrill’s clients are in position to negotiate better deals, which may include rights to terminate, repudiate or suspend their drilling contracts. For instance, Rosneft recently terminated the contract with NADL for the West Navigator, prior to commencement, and the remaining contracts between NADL and Rosneft are at significant risk of termination. In addition, SeaDrill was recently unable to conclude execution of contract extensions for the drilling units West Taurus and West Eminence in Brazil after the approval of such extensions by
Get Access