Seadrill gives up on $1.1 billion of Petrobras orders

Seadrill, the world’s third-biggest offshore driller, cut $1.1 billion worth of Petrobras orders from its backlog due to the Brazilian firm’s troubles, sending its shares 13 percent lower.

Top management at Petrobras quit earlier this month amid a widening corruption probe and the firm said it may need until the end of May to re-calculate losses stemming from the scandal.

Seadrill, which had an order backlog of $20 billion at the end of the third quarter, announced the contract extensions in November in a relief to investors as drilling contracts have been few and far between amid the oil price crash.

“Due to recent developments within Petrobras, (Seadrill) no longer believes the contracts will be concluded in the time frame or on the previously approved commercial terms. Consequently, Seadrill will remove $1.1 billion from the backlog reported in its third quarter earnings release,” Seadrill said.

Drilling rig rates for top deepwater units plunged from a peak of $650,000 per day less than two years ago to under $400,000 and rates may continue to fall, analysts say, as energy companies hold back exploration spending and dozens of newly built rigs hit the market.