Seadrill Partners Files Chapter 11
Seadrill Partners LLC announced Tuesday that it has filed voluntary petitions under chapter 11 of the Bankruptcy Code to preserve value and to continue the operation and marketing of its assets.
The company revealed that it had been in negotiations with an ad hoc group of lenders under the Seadrill Partners’ Term Loan B credit facility, regarding a consensual reorganization of the company’s balance sheet. The voluntary petitions were said to be filed in consultation with, and with the support of, the ad hoc group.
Seadrill Partners noted that it intends to use the bankruptcy process to ensure that all customer, vendor and employee obligations are met without interruption and to complete a consensual restructuring of its debt.
Seadrill Partners is a limited liability company formed by Seadrill to own and operate offshore drilling units. The company’s fleet consists of drillships, semi-submersible rigs and tender rigs operating in benign and harsh environments, according to its website.
The business reported total operating revenues for of $314 million in the first half of 2020, which marked a decrease from the previous six month period (2H19: $367.8 million). The decrease was said to be primarily due to idle time on the West Capricorn and T-15, completion of the West Aquarius contract, an early termination fee for the West Vencedor during 2H19 not being repeated and fewer days in operation for the West Polaris.
As a result of the deteriorating market due to Covid-19 and oil price declines, Seadrill Partners said it recognized a non-cash impairment of $922.9 million in respect of certain idle drilling units. The company registered an operating loss of $923.6 million during 1H 2020 (2H19: income of $10.7 million), which was said to be primarily due to the non-cash impairment recognized in the period.
Back in March this year, Seadrill Partners announced that Grant Creed would step down as its chief financial officer to support Seadrill Limited on a full time basis. It was revealed at the time that John T. Roche, the chief executive officer of Seadrill Partners, would assume the responsibilities of CFO in addition to his current role until a suitable replacement was found.
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