Seadrill Erases $1.1 Billion Worth of Brazilian Offshore Drilling Work

West Eminence, image: Seadrill

Seadrill reports today contract extensions with Petrobras for their ultra-deepwater semi-submersible drilling rigs West Taurus and West Eminence will likely not be “concluded in the timeframe or on the previously approved commercial terms”  due to “recent developments within Petrobras.”

This is hugely negative news for Seadrill considering the two rigs are due to come off contract in February and July of this year, respectively.

Seadrill says they will now remove USD $1.1 billion from their backlog reported in their 2014 Q3 earnings release while they “work with Petrobras and its partners to find a mutually agreeable commercial solution.”

At the time of Seadrill’s Q3 earnings release last year, Seadrill also announced approval for contract awards from Petrobras for the ultra-deepwater drillships the West Tellus and West Carina.  Seadrill says these contracts have been signed and commencement of operations is expected to begin in the second quarter of 2015.

Seadrill shares are down almost 5 percent in premarket trading.