BP Terminates Seadrill Partners Rig Contract

OSLO--Seadrill Partners LLC said Monday that BP PLC (BP) had terminated a rig contract, which would reduce the rig company's order backlog by $160 million, in another sign that lower oil prices are hurting oil-field services companies.

The firm, which is controlled by Oslo-listed oil drilling contractor Seadrill Ltd. (SDRL), said the termination of the West Sirius rig contract would take effect after the current well was completed, likely in early May. Another contract, for the West Capricorn rig, was extended by two years to July 2019, it said.

Seadrill Partners--formed by Seadrill Ltd to own, operate and acquire offshore drilling rigs--said it will receive payments for the remaining West Sirius term, expiring in July 2017, and didn't expect a material impact on its cash flow position.

The cold stacking of the 2008-built West Sirius rig "is another clear testament to the current weakness of the drilling market," said Sparebank1 Markets analyst Robert A. Jensen in a note, keeping a sell rating and 65 kroner target price on the Seadrill stock. "We expect further negative news-flow such as this in coming months and maintain our negative view on the stock and the sector overall."

Seadrill shares traded 1.3% higher at 77.70 kroner.

Write to Kjetil Malkenes Hovland at [e-mail]

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