Pursuit of appeal for arbitration ruling regarding two canceled drillships hits a wall

John Frederiksen’s overseas drilling specialist Northern Drilling is considering its next actions after its efforts to appeal the court’s arbitration judgment associated to canceled orders for 2 drillships with a South Korean shipbuilder came to naught.

2 newbuild seventh-generation ultra-deepwater drillships, West AquilaandWest Librawere initially bought in 2013 by Seadrill. The shipment of these 2 rigs were held off in 2016 for the 2nd quarter of 2018 and the very first quarter of 2019. The overseas driller canceled the agreements in March 2018 due to the fact that it went intoChapter 11 security in September 2017

Following the cancellation from Seadrill, Northern Drilling struck ahandle May 2018 to purchase the 2 rigsfrom Daewoo Shipbuilding & & Marine Engineering (DSME), now referred to as Hanwha Ocean. The West Aquila and West Libra drillships were slated to be provided in January and March 2021. The fate of these 2 rigs wasstill unpredictablein May 2021, as neither was provided to its brand-new owner.

As soon as August 2021 rolled in, it ended up being clear that Northern Drilling would not end up being the brand-new owner of the West Aquila drillship as its subsidiary, West Aquila Inc.,canceled the resale agreement with DSMEdue to the hold-up of shipment in addition to a repudiatory breach of agreement. The business’s other subsidiary, West Libra Inc., did the same and canceled the order for West Libra in October 2021.

As an outcome, Northern Drilling was entrusted no rigs in itsfleetIn reaction to these cancelations, Hanwhachallengedthe overseas drilling gamer’s relocation and started arbitration procedures in London, declaring that it was entitled to maintain the paid amount of $180 million and use it versus its losses due to the termination.

When September 2023 came, Northern Drilling validated that the arbitration judgment from the tribunal associated to the canceled drillship orders favored Hanwha, therefore, the claims of the business’s subsidiaries were dismissed. Hanwha’s claims versus West Aquila Inc. and West Libra Inc. for losses occurring from the terminations, interest, and expenses were to be identified at a future hearing.

As the company’s subsidiaries were dissatisfied with the tribunal’s judgment, they chose to look for leave to appeal it on a point of law and to challenge it on premises of severe abnormality. With the appeals procedure underway, the last judgment worrying whether Northern Drilling would be approved leave to appeal was anticipated before completion of 2Q 2024. On the other hand, a judgment on the benefits, based on leave being approved, was likewise expected before completion of 2Q 2024.

Following the Technology and Construction Court’s judgment, the overseas drilling specialist has actually detailed that applications for leave to appeal the judgment on points of law have actually been declined while the business’s applications challenging the judgment on premises of severe abnormality have actually been dismissed. As an outcome, the company remains in the procedure of thinking about the judgment.

Hanwha has currently offeredthe West Aquila drillship to Liquila Venturesa joint endeavor formed by among Transocean’s subsidiaries, Perestroika, and funds handled by Lime Rock Management, for around$200 millionThese are not the only arbitration procedures including Northern Drilling and Hanwha, as another such procedure is continuous.

After the overseas drilling company protected a choice to obtain a 3rd drillship, called West Cobaltsouthern Korean shipbuilder at a purchase rate of $350 million, it canceled the resale agreement for the drillshipin October 2019 on numerous premises, mentioning “repudiatory breach of agreement by DSME.

The shipbuilderchallenged the cancellation in court in late November 2019. The case has actually not yet been dealt with and the disagreement is– based upon the driller’s declarations from in 2015–“still in its early phases.” West Cobalt, formerly referred to as Cobalt Explorer, was initially bought by Vantage Drilling for set up shipment in 2015, however the order was canceled.