SFL – Ruling from Oslo District Court in the Seadrill Legal Case

Rhea-AI Summary

SFL (NYSE: SFL) has received a favorable ruling from the Oslo District Court in its legal case against Seadrill subsidiaries. The dispute arose following the redelivery of the drilling rig Hercules to SFL in December 2022. The court ordered Seadrill subsidiaries to pay SFL approximately $48 million in total compensation, which includes late payment interest and legal costs, due to breach of contract upon rig redelivery.

The ruling is subject to appeal from both parties, with a deadline of March 5, 2025. The company will carefully review the details of the court's judgment.

Positive

• Court ruling awards SFL approximately $48 million in compensation
• Successful legal outcome validates SFL's contract breach claim

Negative

• Ruling subject to appeal until March 2025, creating uncertainty about final compensation
• Potential for extended legal proceedings if either party appeals

Insights

Legal and Financial Analyst

The Oslo District Court's ruling in favor of SFL marks a significant legal and financial victory, with the court ordering Seadrill subsidiaries to pay $48 million in total compensation. This judgment encompasses three important components: the primary compensation, late payment interest and legal costs stemming from the breach of contract regarding the Hercules drilling rig redelivery.

This ruling carries substantial implications for SFL's financial position. With a market capitalization of $1.46 billion, the $48 million award represents approximately 3.3% of the company's market value - a material sum that could positively impact their cash position and quarterly results if collected. However, investors should note that the appeal window remains open until March 5, 2025, which could delay the final resolution and receipt of funds.

The verdict sets an important precedent for the offshore drilling sector, particularly regarding contract enforcement and redelivery obligations. This could strengthen SFL's position in future contract negotiations and potentially influence industry-wide practices in rig leasing agreements. The ruling may also enhance SFL's risk management leverage, potentially leading to more favorable terms or increased security requirements in future contracts.

From a broader industry perspective, this case highlights the robust legal framework protecting vessel owners' interests in the offshore sector. The successful enforcement of contractual obligations could have a ripple effect, potentially leading to stricter compliance with redelivery terms across the industry and more detailed attention to contractual obligations in similar agreements.

SFL Corporation Ltd. ("SFL" or the “Company”) (NYSE: SFL) today received the ruling delivered by the Oslo District Court regarding the legal case between SFL’s rig-owning subsidiary and subsidiaries of Seadrill Ltd. (“Seadrill”) following the redelivery of the drilling rig Hercules to SFL in December 2022.

The court today issued a judgment in favor of SFL’s subsidiary where certain subsidiaries of Seadrill were ordered to pay SFL an amount equivalent to a total of approximately $48 million in compensation, including late payment interest and legal cost, as a result of its breach of contract upon redelivering the rig to SFL.

We will carefully review the details of the court’s judgment and note that the ruling is subject to appeal from both sides by March 5, 2025.

February 5, 2025

The Board of Directors
SFL Corporation Ltd.
Hamilton, Bermuda

Investor and Analyst Contacts:
Espen Nilsen Gjøsund, Vice President - Investor Relations, SFL Management AS
+47 47 50 05 00
Aksel Olesen, Chief Financial Officer, SFL Management AS
+47 23 11 40 36

Media Contact:
Ole B. Hjertaker, Chief Executive Officer, SFL Management AS
+47 23 11 40 11

About SFL

SFL has a unique track record in the maritime industry and has paid dividends every quarter since its initial listing on the New York Stock Exchange in 2004. The Company’s fleet of vessels is comprised of tanker vessels, bulkers, container vessels, car carriers and offshore drilling rigs. SFL’s long term distribution capacity is supported by a portfolio of long term charters and significant growth in the asset base over time. More information can be found on the Company's website: www.sflcorp.com

Cautionary Statement Regarding Forward Looking Statements

This press release may contain forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including SFL management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although SFL believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, SFL cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.

Important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions in the seaborne transportation industry, which is cyclical and volatile, including fluctuations in charter hire rates and vessel values, changes in demand in the markets in which the Company operates, including shifts in consumer demand from oil towards other energy sources or changes to trade patterns for refined oil products, changes in market demand in countries which import commodities and finished goods and changes in the amount and location of the production of those commodities and finished goods, technological innovation in the sectors in which we operate and quality and efficiency requirements from customers, increased inspection procedures and more restrictive import and export controls, changes in the Company’s operating expenses, including bunker prices, dry-docking and insurance costs, performance of the Company’s charterers and other counterparties with whom the Company deals, the impact of any restructuring of the counterparties with whom the Company deals, and timely delivery of vessels under construction within the contracted price, governmental laws and regulations, including environmental regulations, that add to our costs or the costs of our customers, potential liability from pending or future litigation, potential disruption of shipping routes due to accidents, political instability, terrorist attacks, piracy or international hostilities, the length and severity of the ongoing coronavirus outbreak and governmental responses thereto and the impact on the demand for commercial seaborne transportation and the condition of the financial markets, and other important factors described from time to time in the reports filed by the Company with the United States Securities and Exchange Commission. SFL disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act

FAQ

What compensation did SFL win in the Seadrill legal case?

The Oslo District Court ordered Seadrill subsidiaries to pay SFL approximately $48 million in total compensation, including late payment interest and legal costs.

When can the Oslo District Court ruling for SFL be appealed?

The ruling can be appealed by either party until March 5, 2025.

What caused the legal dispute between SFL and Seadrill?

The legal case arose from a breach of contract when Seadrill subsidiaries redelivered the drilling rig Hercules to SFL in December 2022.

When was the drilling rig Hercules returned to SFL ?

The drilling rig Hercules was redelivered to SFL in December 2022.