John Fredriksen-backed Northern Drilling has lost an arbitration against South Korea’s Hanwha Ocean over two cancelled drillship newbuilding resale contracts.
The Oslo-listed drilling company confirmed in a statement Monday that the London tribunal had found in favour of the former Daewoo Shipbuilding & Marine Engineering (DSME).
Northern Drilling cancelled the resale of the 7th generation West Aquila and West Libra in August and October 2021 due to what it described as a “delay of delivery as well as a repudiatory breach of contract”.
“Hanwha’s claims…for losses arising from the terminations, interest, and costs will be determined at a future hearing,” Northern Drilling said.
The drilling company said it was “disappointed” with the tribunal's determination and is currently considering whether to appeal.
In November 2022, Frederik Mohn teamed up with a US private equity firm to buy the West Aquila from the then DSME for $200m.
The drillship was recently resold to US-listed drillship giant Transocean for an undisclosed price.
Arbitration has proven a mixed blessing for shipyards and drilling rig owners with decisions often going either way.
In March 2021, Samsung Heavy Industries was ordered to pay Stena Drilling $411m after it lost at arbitration over a cancelled drillship deal.
But Samsung was on the winning side in October 2020 in a similar arbitration over Pacific Drilling’s disputed cancellation of its drillship newbuilding.
Northern Drilling agreed to acquire the West Aquila and its sister rig West Libra in May 2018 for $296m per unit, with $90m paid at the contract signing.
The initial contract had delivery dates of January and March 2021. However, the parties agreed on a flexible delivery schedule.
The pair were originally ordered by Fredriksen’s Seadrill in July 2013 for KRW 1.25trn ($1.16bn) but were later cancelled due to its restructuring.
Northern Drilling was set up in March 2017 for ownership of offshore drilling rigs for operations in benign and harsh environments, including ultra-deep-water environments.
