AWILCO AND KEPPEL – CONTRACT TERMINATION OF THE CONSTRUCTION OF NORDIC SPRING
Awilco Drilling has notified the Singaporean rig builder Keppel FELS that it has exercised its contractual termination right under the newbuilding contract between the two parties for the construction of a semi-submersible drilling rig, Nordic Spring, as a result of breaches under the Vessel Construction Contract. At the same time, Awilco has also exercised its contractual rights under the contract and given KFELS notice of termination as a result of Force Majeure.
The vessel construction contract provides that on termination Awilco will be entitled to a refund of the instalments paid to KFELS of USD 43.0 million plus accrued interest.
Nordic Spring is one of the two semi-submersible drilling rigs of Moss Maritime CS60 Eco MW design ordered by Awilco Drilling subsidiaries from KFELS, which both now have been terminated. In addition, a separate Awilco Drilling subsidiary has an option for one further rig of the same design.
Keppel FELS had issued a notice of termination of the Second Awilco Contract on 4 December 2020 and commenced arbitration to enforce its rights against Awilco, including the right to retain the amounts already paid by Awilco to date and seek reimbursement of Keppel FELS’ costs of the project up to the date of termination by Keppel FELS. As Keppel FELS has already terminated the Second Awilco Contract on 4 December 2020, it is Keppel FELS’ position that the Notice can have no effect. In any event, Keppel FELS denies the allegations made by Awilco. As at the date of this announcement, Keppel FELS does not expect any reversal of revenue recognised in respect of the Second Awilco Contract. The valuation of the asset under the Second Awilco Contract will be assessed at the end of each financial reporting period.
(Source: Awilco Drilling/ Keppel O&M – Image: Awilco Drilling)