BRIEF-Sevan Drilling renegotiates rig contracts with Petrobras
March 30 (Reuters) - Sevan Drilling Ltd says:
* 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 $250,000 per day effective Feb. 26 through the remaining term of the contract, ending July 2018 and a portion of the dayrate continues to be denominated in Brasilian Reals.
* 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 $11 million in revenue backlog. Daily operating cost is expected to be significantly lower as the rig will perform non-drilling activities for Shell.
* The Sevan Driller contract was mutually agreed to be cancelled effective from Dec. 1 2015.
* As of Feb. 26, 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. Source text for Eikon: Further company coverage: (Reporting by Gwladys Fouche)
© Thomson Reuters 2017 All rights reserved.