Seadrill suspends dividend as falling oil price takes toll A "perfect storm" involving the declining oil price and Russian sanctions has prompted Seadrill, the world's largest oil and gas rig operator, to suspend its dividend. Seadrill's shares fell nearly 23 per cent on Wednesday morning following the announcement of its third-quarter results, in which the Oslo-listed company reported a 40 per cent fall in net income. The sharp fall in the oil price since June, plus an oversupply of drilling rigs, has coincided with uncertainty over the future of an Arctic exploration deal involving Seadrill subsidiary North Atlantic Drilling and Rosneft, the Russian state owned energy company. "It has almost been a perfect storm for Seadrill this quarter," said Rune Magnus Lundetrae, chief financial officer, "in terms of downward pressure on the oil price, the demand-supply balance for rigs, increasing cost focus from the oil companies and then geopolitical uncertainty surrounding the Rosneft deal, the biggest offshore contact we have ever signed." Seadrill is controlled by billionaire John Fredriksen. Both Seadrill and NADL - which specialises in the Arctic and harsh offshore drilling environments - are listed in New York. By suspending the dividend, the company was "acting responsibly, before we are forced to," Mr Lundetrae said. Seadrill instead intends to strengthen its balance sheet by cutting debt, putting itself in a position to consider possible acquisitions. Mr Lundetrae said Seadrill was not convinced the market would revive in the next 18 to 24 months, with next year likely to be worse than this year. Meaningful recovery was more likely in 2017, he added. Seadrill last halted dividend payments in November 2009, at the height of the economic downturn. Mr Fredriksen said the decision to suspend the dividend had been a difficult one for the board. "However, taking into consideration the significant deterioration in the broader offshore drilling and financing markets over the past quarter, the board believes this is the right course of action for the company," he added. I am confident that Seadrill will emerge from this downturn even stronger and that we will resume our distributions in the future. Mr Lundetrae said the uncertainty around Rosneft - which has been affected by western sanctions imposed on Russia over the Ukraine crisis - had added to negative sentiment in the energy industry. US sanctions on Russia "look very challenging to operate within . . . given all the US equipment on our rigs." But Mr Lundetrae said Seadrill is still working with Rosneft, having just extended a walkaway clause to May next year. The Financial Times reported this month that a series of contracts between NADL and Rosneft should have been completed by early November but have been postponed until the end of May. If US sanctions are not eased by then, the deal is likely to be ended, people familiar with the transaction said. Seadrill reported net income of $190m for the three months to September 30, down 39.6 per cent compared with the same period last year, and revenue of $1.3bn, up 1 per cent.