North Atlantic Drilling Ltd (North Atlantic) a majority owned subsidiary of Seadrill Limited, has secured 10-year contract awards for the jack-ups West Elara and West Linus with ConocoPhillips Skandinavia AS (ConocoPhillips) for work in the Greater Ekofisk Area. The total additional backlog for the new contract awards is estimated at $1.4 billion excluding performance bonuses.
Jack-up West Linus - Image courtesy of Seadrill
As part of the agreement, the Company has agreed to a day rate adjustment on the existing West Linus contract effective from April 2017, resulting in a $58 million reduction in current backlog.
The new West Elara contract which is expected to commence in October 2017 includes a period of fixed day rates until March 2020 and contributes approximately $160 million of contract backlog. A market indexed rate is applicable thereafter until October 2027 which the Company believes will contribute an estimated $530 million of contract backlog.
The contract on West Linus has been extended from May 2019 until the end of 2028 at a market-indexed day rate, which the Company believes will contribute an estimated $706 million of contract backlog.
The backlog estimate indicated for the market indexed rate period for each rig is based on the third-party day rate assumptions presented in the Seadrill Limited release dated January 31, 2017, and includes an agreed percentage discount. The estimates are subject to changes based on market conditions.
The awards are subject to ConocoPhillips receiving partner approvals for the contracts.