Bermuda-based offshore drilling company Seadrill Limited has reached a settlement agreement with Northern Ocean Ltd predominantly with respect to balances outstanding from Seadrill's preparation of the West Mira and West Bollsta rigs in the North Sea.

Seadrill said the settlement agreement closes all outstanding balances, claims and counterclaims between the companies and their respective subsidiaries by way of set-off as full and final settlement.

The settlement agreement is subject to certain conditions, including, but not limited to, obtaining approval by the US bankruptcy court under Seadrill's Chapter 11 protection.

Grant Creed, chief financial officer of Seadrill, said: "Conclusion of this uncertainty around claims and counterclaims with NOL is an important prerequisite to Seadrill being able to proceed with its Chapter 11 filing.

“Shareholders should note the Plan of Reorganisation filed with the Court on July 24, 2021 leads to a substantial equitisation of debt meaning existing shareholders receive virtually no recovery for their existing shares."

Seadrill commenced Chapter 11 cases in Texas on February 10 under the section of the US Bankruptcy Code that covers court-supervised restructurings of businesses.

The company filed the Plan of Reorganisation, an accompanying disclosure statement, and related documents in the United States Bankruptcy Court for the Southern District of Texas and said it will proceed expeditiously to obtain Bankruptcy Court approval of the same.

The company said the plan provides a clear pathway for Seadrill to restructure its balance sheet with the support of the majority of its senior secured lenders.

Seadrill is an offshore drilling contractor that conducts its operations from shallow to ultra-deep-water environments.

The company operates 24 rigs, which includes drillships, jack-ups and semi-submersibles.