Offshore drilling contractor Noble Corp., which had been having difficulties with lessened desire amid plunging oil prices, has filed for bankruptcy with a strategy to slash its $4 billion credit card debt burden.
The Chapter eleven filing on Friday arrived two weeks soon after Noble missed a $fifteen million curiosity payment and explained it was in talks with its collectors about a restructuring offer.
“Noble enters chapter eleven with the robust assistance of its collectors, getting executed a restructuring assistance agreement” that “provides for a substantial deleveraging of Noble’s cash composition with no impairing trade collectors,” CFO Richard Barker explained in a courtroom declaration.
The strategy would reduce Noble’s credit card debt load — all of which is unsecured — to a lot less than $450 million, with $three billion in credit card debt being converted to fairness.
“The elementary issue that Noble faces is that its solely unsecured cash composition was built for a pretty unique offshore market place surroundings, in which activity stages and drilling dayrates have been substantial sufficient to assistance the important cash that had been deployed to broaden and upgrade its fleet in reaction to the market place desire in this structurally unique market place,” Barker explained.
“Today, Noble is simply just not able to deliver enough earnings to assistance its recent cash composition,” he additional.
Noble at the moment operates a fleet of 24 rigs around the environment, serving customers which includes Royal Dutch Shell, ExxonMobil, Equinor ASA, and Saudi Arabian Oil Co.
In 2019, it lost $734.9 million on earnings of $1.31 billion, reflecting a important slide in desire for oil rigs as producers lower cash shelling out merged with an oversupply of rigs. Its shates had plunged eighty four% for the year via Thursday’s closing.
“For Noble, the development of COVID-19 into a world-wide pandemic erased any doubt as to regardless of whether Noble would be equipped to prevent bankruptcy,” Barker explained, noting desire for oil has declined drastically owing to social distancing, lessened travel, and remote get the job done insurance policies.
Noble is the 2nd main offshore driller to file for bankruptcy this year, next Diamond Offshore Drilling in April. Another driller, Valaris, warned very last 7 days that Chapter eleven bankruptcy was “imminent.”