Court Orders Seadrill to Pay Compensation in Contract Breach Dispute

A recent court order has brought a legal battle between SFL Corporation and Seadrill to a close. The dispute arose from an alleged contract breach involving the redelivery of a semi-submersible rig, leading to a multimillion-dollar compensation ruling against Seadrill.

In December 2022, SFL Corporation’s rig-owning subsidiary received the Hercules rig back from Seadrill, triggering a legal case that culminated in the Oslo District Court’s decision.

Back in August 2021, SFL and Seadrill entered into an amendment to their charter agreement for the Hercules rig, extending its employment with an oil major into the second half of 2022. The agreement stipulated daily hire rates and outlined payment terms during different operational scenarios.

Following Seadrill’s emergence from Chapter 11 bankruptcy, the amended agreement required approval from SFL’s financing banks. Despite Seadrill’s reorganization plan approval in February 2022, the dispute over the rig’s redelivery persisted.

Seadrill’s failure to redeliver the rig in the specified condition led to SFL filing a claim in the Oslo District Court seeking damages of approximately $28 million. The court ruled in favor of SFL’s subsidiary, ordering Seadrill to pay around $48 million in compensation, including late payment interest and legal costs.

“We will carefully review the details of the court’s judgment and note that the ruling is subject to appeal from both sides by March 5, 2025,” stated SFL Corporation.

The 2008-built Hercules semi-submersible rig, capable of operating in deepwater and harsh environments, has a drilling depth of 35,000 ft. Following the legal resolution, the rig was hired by Equinor for drilling operations in August 2023.