SINGAPORE (Oct 17): Cosco Corporation (Singapore) ( Financial Dashboard) says subsidiary Cosco (Qidong) Offshore Co. and owner Sevan Drilling Rig VI have agreed to postpone the delivery date of drilling unit Sevan Developer.

Cosco (Qidong) has been working on the Sevan Developer under a turn-key EPC (Engineering, Procurement and Construction) contract with Sevan Drilling.

Under the contract, delivery of the drilling unit was to take place in the second quarter of 2014.

The two parties will now defer the delivery date of Sevan Developer for a further 12 months from Oct 15.

The new delivery date also comes with options exercisable at six-month intervals which could extend the delivery date up to a total of 36 months.

The contract will terminate at the end of each deferred period, unless extended by mutual agreement between the Sevan Drilling and Cosco Qidong.

It was also agreed that while construction of Sevan Developer continues at Cosco Qidong’s shipyard during the deferred period, the shipowner is able to continue to market the drilling rig as part of its fleet.

Cosco Corp (S) says it is not able to the ascertain the financial impact of the agreement for deferment at this point in time.

Of late, Chinese shipyards like Cosco Corp (S) have taken on to building rigs as shipping, shipbuilding and repair activities decline.

However, the learning curve in rig-building has been steep, leading to poor execution and delays. Margins have also been sacrificed to win new contracts.

For the 2Q ended June, Cosco Corp (S) reported a 19% rise earnings at $14.3 million, up 19% from a year ago.

Turnover from shipyard operations increased by 29.3% to $1.1 billion while turnover from dry bulk shipping and other businesses decreased by 6.1% from $13.1 million.

Cosco Corp (S) will report its 3Q results on Nov 3.

The stock closed 4.1% lower at 59 cents.