Diamond Offshore Files for Bankruptcy



Diamond Offshore Files for Bankruptcy
Diamond Offshore Drilling filed for bankruptcy amid an unprecedented crash in crude prices that's wrecking demand for oil exploration at sea.

(Bloomberg) -- Diamond Offshore Drilling Inc., the rig contractor controlled by Loews Corp., filed for bankruptcy amid an unprecedented crash in crude prices that’s wrecking demand for oil exploration at sea.

The company listed $5.8 billion of assets and $2.6 billion of debt in a Chapter 11 petition filed in Houston, citing year-end 2019 data. It has about $434.9 million of cash on hand, according to the document.

Diamond owns rigs that can drill in water more than two miles deep. But offshore oil is among the most expensive to produce, putting the company at a disadvantage when prices plunged to less than $30 a barrel.

While newer deepwater projects are less expensive, they still take longer to develop than shale wells and they still can’t compete on costs. What’s more, a global glut of offshore vessels has squeezed profit margins.

Pandemic’s Role

Conditions worsened “precipitously in recent months,” the company said, citing a price war between OPEC and Russia and the Covid-19 pandemic. With cash running short, the Houston-based company led by Chief Executive Officer Marc Edwards skipped a semiannual interest payment due April 15 on some of its senior notes.

Diamond Offshore adds to the more than 200 oilpatch bankruptcies dating from 2015, according to a tally by the Haynes & Boone law firm. About 2,500 jobs could be at stake at Diamond.

The case is Diamond Offshore Drilling Inc., 20-32307, U.S. Bankruptcy Court for the Southern District of Texas (Houston).

To contact the reporters on this story:
David Wethe in Houston at dwethe@bloomberg.net;
Jeremy Hill in New York at jhill273@bloomberg.net

To contact the editor responsible for this story:
Rick Green at rgreen18@bloomberg.net



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Fred Wiegand  |  April 29, 2020
The oil companies do what they can to help the service companies. But if and when the prices of oil go back up ; there will be a knee-jerk of higher services prices.