uploads/2017/11/Bankruptcy.jpg

Another Offshore Driller Applied for Bankruptcy

By

Updated

Bankruptcy

After Seadrill (SDRL), one more offshore driller applied for Chapter 11 bankruptcy protection.

Pacific Drilling (PACD) filed for Chapter 11 bankruptcy protection in an aim to restructure roughly $3 billion in debt. The company has ~$350 million of cash and cash equivalents as of September 30, 2017. Pacific Drilling’s CEO, Paul Reese, said, “We enter Chapter 11 with a strong cash position and the dedicated team necessary to continue to deliver the highest quality service to our customers in the safest and most efficient manner.” Pacific Drilling applied for a “first-day” motion. It got immediate approval from the court on November 16, 2017. It gives the company the authority to pay employee wages and benefits, pay its suppliers and vendors, and utilize its cash management system. Pacific Drilling’s day-to-day operations will continue.

Other bankrupt companies

In September 2012, Seadrill filed for Chapter 11 bankruptcy protection to restructure its $10 billion debt. To learn more about the restructuring, read Seadrill filed for bankruptcy on September 12. In March, Ocean Rig (ORIG) filed for Chapter 15 bankruptcy. The company reached an agreement with a group of lenders to convert $3.7 billion of debt into new equity. In June 2016, Hercules Offshore (HERO) filed for bankruptcy. Most of the companies mentioned above have used Chapter 11 bankruptcy to restructure their debt. However, Hercules Offshore used it to dissolve its operations.

Going strong

Although many companies couldn’t withstand the offshore drilling downturn, there are still many offshore drillers—Transocean (RIG), Diamond Offshore (DO), Ensco (ESV), and Noble (NE)—that are going strong in this downturn.

More From Market Realist