Seadrill Partners LLC (NYSE:SDLP) on Tuesday has declared a quarterly dividend of $0.10 per share, down from the current quarterly dividend of $0.25 per share. The quarterly dividend is payable on August 12 to shareholders of record on August 5.

Reduced Quarterly Dividend

Seadrill Partners has decided to significantly cut the quarterly dividend issued to shareholders of common stock because of the implications of the West Capricorn extended standby rate period and the West Capella drilling contract termination.

The agreement for the West Capricorn operation, which has been down-manned in May, was sealed last month. It specifies an extended standby daily rate of $316,000 and a full daily rate of $526,000. The full operations are expected to begin again by late next year.

Presently, Seadrill Partners has an average contract duration of 2.7 years to fulfill, with a total contract backlog of $3.40 billion.

The company believes that reducing its quarterly dividend for the second quarter by more than half in the midst of these concerns will somehow strengthen its balance sheets. Consequently, Seadrill Partners remains confident in its recovery prospects as it seeks more growth opportunities through new contracts.

Q1 Financial Highlights

Last May, Seadrill Partners issued its earnings report for the first quarter, showing an operating revenue of $444 million. This is significantly lower than the reported $467.20 million operating revenue during the previous quarter. The West Polaris day rate reduction to $490,000 from $653,000 highly affected the quarterly decline in revenue.

For the period, Seadrill Partners had an operating income of $223.50 million, which is down from $238.10 million during the fourth quarter.

Meanwhile, operating expenses during the period were seen at $220.50 million, which is slightly lower from the previous quarter’s operating expense total of $229.10 million. The reduced operating expenses had been affected mainly by the reduced overhead costs and better vessel and rig operating expense management.

The company ended the quarter with a total cash and cash equivalents of more than $400 million.