Moody's Downgrades Offshore Drillers, Including Ensco, Transocean

Moody's Downgrades Offshore Drillers, Including Ensco, Transocean
Offshore drilling contractors likely to struggle through at least 2018, Moody’s Investors Service says in a new report.

Prolonged weakness in oil and gas prices is taking its toll throughout the energy industry, and as such, Moody’s Investors Service is recalibrating its ratings for several companies in one direction: down.

“The drop in oil prices and weak natural gas prices has caused a fundamental change in the energy industry, and its ability to generate cash flow has fallen substantially,” analysts write in a Feb. 26 credit research report. “Moody’s believe this condition will persist for several years.”

Upstream cuts in capital spending at upstream companies and a decline in their creditworthiness, along with a steady supply of newbuild rigs in an already over-supplied market, will keep dayrates under pressure through 2018, Moody’s said. As current drilling contracts roll off and are replaced by contracts with lower dayrates, the investors group said leverage and cash flow will deteriorate sharply.

As a result of the fundamental shift throughout the industry, Moody’s is taking another look at the credit ratings of several companies. Among them, the firm downgraded six offshore drillers:

  • Atwood Oceanics’ corporate family rating dropped to Caa1 from Ba3 with a negative outlook.
  • Diamond Offshore Drilling’s senior unsecured ratings dropped to Ba2 from Baa2 with a stable outlook.  
  • Ensco plc’s senior unsecured notes dropped to B1 from Baa2 with a stable outlook.
  • Noble Holding International’s senior unsecured ratings dropped to B1 from Baa3 with a stable outlook.
  • Rowan Companies’ senior unsecured ratings dropped to B1 from Baa3 with a stable outlook.
  • Transocean’s corporate family rating dropped to B2 from Ba2 with a stable outlook.

An award-winning journalist, Deon has reported on energy, business and politics for almost 20 years. Email Deon at


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies

Our Privacy Pledge

More from this Author
Deon Daugherty
Senior Editor | Rigzone
 -  Deal Of The Month: ConocoPhillips Cuts... (Apr 28)
 -  Op-Ed: Big Trouble in North Korea, Ven... (Apr 27)
 -  BLOG: Dream On, OPEC - The US Will Nev... (Apr 27)
 -  US E&Ps Can Turn A Profit On $50 to $6... (Apr 26)
 -  Unsung Gulf of Mexico Tracks New Crude... (Apr 25)

Most Popular Articles

From the Career Center
Jobs that may interest you
Project Manager
Expertise: Commercial Management|Project Management|Site Engineer
Location: LA
Product Manager
Expertise: Business Development|Executive
Location: Houston, TX
Project Manager
Expertise: Project Management
Location: Atlanta, GA
search for more jobs

Brent Crude Oil : $51.68/BBL 0.27%
Light Crude Oil : $49.25/BBL 0.74%
Natural Gas : $3.24/MMBtu 3.18%
Updated in last 24 hours