Fred Olsen said today that its drilling subsidiary, Dolphin Drilling, will NOT be exercising its option with Hyundai Heavy Industries for a second newbuild drillship.

The option was included on a US$615 million contract announced in April that called for a state-of-the-art ultra-deepwater drillship.  The option was originally set to expire in October but was extended to December 20th, giving reason to believe that the option would be exercised.

It’s unclear why Fred Olsen decided to pass on the newbuild option, especially since the newbuild, along with Dolphin Drilling’s existing drillship Bedford Dolphin, have landed 4-year contracts with Anadarko in support of drilling operations offshore Mozambique.  The newbuild drillship contract alone is valued at approximately $727 million, including mobilization.

The newbuild drillship is expected to be delivered in the 3rd quarter 2013.