November 12, 2012 / 8:51 AM / 5 years ago

UPDATE 1-Seadrill may buy more rigs after $1.18 bln deal

* Five-year deal for work off Canada, Greenland

* Offshore drilling moving to more challenging places

OSLO, Nov 12 (Reuters) - Seadrill, the world’s biggest offshore rig group by market value, has signed a $1.18 billion charter contract and may soon order more rigs to capitalise on a tight market.

Seadrill, the biggest firm in shipping tycoon John Fredriksen’s business empire, will provide a deepwater, harsh environment rig to Husky Oil Operations Ltd for five years to work off Canada and Greenland, as energy firms move to more extreme locations to find gas and oil.

“The award ... is a clear sign of the present tightness in the harsh environment (and) deepwater drilling market,” Fredriksen said on Monday.

“Seadrill currently has several options and proposals to increase the newbuild programme within this field further. A decision regarding further investment within this segment is likely to be taken shortly.”

Seadrill said last week it was to sell down part of its Asian business to raise cash for the more lucrative deep-sea market where charter rates have soared as exploration in places such as Brazil, East Africa and Asia have become the sector’s focus.

Seadrill has been on an order spree in recent years and has at least 8 ultra deepwater vessels under construction as yard prices dipped due to the shipping industry’s depression just when charter rates soared.

A harsh environment, deep-sea rig costs around $650 million and the current deal to Husky implies a daily charter rate of around $650,000.

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