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Another Blow For Seadrill after Statoil Cancels Rig Contract

Seadrill Ltd (NYSE:SDRL) shares are down 4% in morning trading after news broke that Statoil ASA(ADR) (NYSE:STO) canceled an offshore contract for a drilling rig, the West Hercules, which was originally contracted for drilling in Norway. Due to the termination, Seadrill Ltd (NYSE:SDRL) will receive a lump sum payment of $61 million plus some additional compensation for the demobilization of the rig. Seadrill is now actively looking for new work for the rig. Activity in the offshore drilling market has cooled off substantially since Brent prices have more than halved from their 2014 highs. Although Brent has rallied in recent months, the offshore drillers will need considerably higher prices to see offshore activity pick up again. Also hurting Seadrill and Statoil ASA (ADR) (NYSE:STO) (whose shares are down around 1%) are lower crude prices as traders take profits. Among the funds we track, seven funds owned $71.65 million worth of Statoil ASA (ADR) (NYSE:STO) shares, which accounted for 0.10% of the oil giant’s float on March 31, while 22 funds owned $110.83 million worth of Seadrill Ltd (NYSE:SDRL), equal to 6.80% of its float.