Diamond Offshore Drilling., the rig contractor, owned by Loews Corp., filed for bankruptcy amid an unusual crash in crude prices that is dampening demand for oil exploration at sea.
The firm listed $5.8 billion of assets and $2.6 billion of debt in a Chapter 11 petition filed in Houston, citing year-end 2019 records. It has nearly $434.9 million of money on hand, in line with the document.
Diamond controls rigs that can drill in water over two miles deep. But offshore oil is among the many costliest to produce, putting the corporate at a disadvantage when prices dropped to lower than $30/barrel.
While newer deepwater projects are cheaper, they still take longer to develop than shale wells, and they nonetheless can’t compete on costs. What’s extra, a worldwide glut of offshore vessels has contracted revenue margins.
Conditions worsened precipitously in recent months, the corporate stated, citing a price battle between OPEC and Russia and the Covid-19 pandemic. With cash running brief, the Houston-based firm headed by Chief Executive Officer Marc Edwards skipped a semiannual interest payment due April 15 on some of its senior notes.
Diamond Offshore contributes to the more than 200 oilpatch bankruptcies courting from 2015, based on a tally by the Haynes & Boone law agency. Nearly 2,500 jobs could be at stake at Diamond.
The case is Diamond Offshore Drilling, 20-32307, U.S. Bankruptcy Court for the Southern District of Texas.