Diamond Offshore Files for Bankruptcy

The chapter 11 filing comes as record-low crude prices and excess supply have impacted operations across the industry. About 2,500 jobs could be at stake.

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Diamond Offshore Drilling announced the company and select subsidiaries filed for chapter 11 bankruptcy protection.

Diamond Offshore intends to use the proceedings to restructure and strengthen its balance sheet and achieve a more sustainable debt profile, while continuing to focus on safe, reliable, and efficient contract drilling services for its global clients.

"After a careful and diligent review of our financial alternatives, the board of directors and management, along with our advisors, concluded that the best path forward for Diamond and its stakeholders is to seek chapter 11 protection,” said Diamond President and Chief Executive, Marc Edwards.

In a filing with the Securities and Exchange Commission earlier in the month, the company told investors it would not make the semiannual interest payment under its 5.7% 2039 notes

The company plans to file its quarterly report for the fiscal quarter ended 31 March around early May, but it will not issue an earnings press release or hold a conference call to discuss Q1 results.

It has also received a delisting notice for its shares of common stock from the New York Stock Exchange (NYSE). The company does not presently anticipate exercising its right to appeal NYSE regulation's delisting determination, and it expects its common stock will be quoted on the over-the-counter pink markets.

The bankruptcy comes a week after Nymex WTI futures established an all-time low at -$37.63/bbl, driven by weak global demand and ample supply. The global supply glut has led many companies to cut back on offshore projects and drilling operations.

Globally, Baker Hughes’ showed the worldwide rig count (offshore and onshore) at 1,964 in March, which was down by 161 (7.6%) from 2,125 in February. The March rig count was also down by 342 (14.8%) from the 2019 high of 2,306 in February 2019.

In the US, Baker Hughes’ data showed the total offshore rig count was 17 on 24 April, which was unchanged from a week earlier and down by 26% from the 2020 high of 23 seen on 7 February. The US offshore rig count on 24 April was down by 11 (39%) from the 2019 high of 28.

Diamond Offshore, which provides global drilling services has a total fleet of 15 offshore drilling rigs, consisting of 11 semisubmersibles and four dynamically positioned drillships. The company’s last rig report in February showed three were cold-stacked and 1 warm-stacked.