Seadrill, a Big Offshore Oil Player, to Seek Bankruptcy Protection--Update
August 24 2017 - 12:24PM
Dow Jones News
By Costas Paris
Offshore-drilling services major Seadrill Ltd. said Thursday it
will likely file for bankruptcy protection next month as part of a
plan to restructure around $10 billion in debt.
The Bermuda-based company, controlled by Norwegian shipping
magnate John Fredriksen, is one of the world's largest offshore
drilling companies. It operates a fleet of 68 rigs and drillships
for customers including Total SA, Petrobras and Exxon Mobil
Corp.
Seadrill said it plans to file for chapter 11 in the U.S. by
Sept. 12 but that its business operations remain unaffected by the
restructuring efforts and it expects to continue to meet its
ongoing customer and business counterparty obligations.
Its assets at the end of the first half amounted to $20.7
billion.
Seadrill's shares tumbled 10 cents to 16 cents in New York
trading and are down 99% from their 2013 peak, when the company's
market value exceeded $22 billion.
Daily leases for the company's rigs, which commanded up to
$800,000, dropped to around $200,000 as cheap oil from U.S. shale
drilling flooded the market.
The low oil prices, coupled with a glut of rigs, has put rig
owners under severe pressure. In late July, Ocean Rig UDW Inc.
filed for bankruptcy protection in the U.S. Hercules Offshore Inc.,
GulfMark Offshore Inc., Toisa Ltd. and Vantage Drilling have also
spent time in bankruptcy court since oil and gas prices cratered.
Paragon Offshore Ltd., which emerged from chapter 11 last month,
was forced back into bankruptcy after it was unable to transfer two
rigs to its reorganized entity.
Seadrill has managed to push back a number of restructuring
deadlines over the past year, but it faces a $1 billion bond, which
matures next month.
The company said its latest restructuring plan will likely
involve raising about $1 billion of new capital, along with a
five-year extension of its bank facilities and "substantial"
impairment or conversion of its bonds into equity.
Seadrill is discussing the restructuring with dozens of creditor
banks including Sweden's Nordea, Norway's DNB and Denmark's Danske
Bank, as well as with bondholders and rig-building yards in
Asia.
In an interview with The Wall Street Journal in June, Mr.
Fredriksen said he was putting in long hours to keep Seadrill from
collapsing. "It's hard to answer if it will come out of
restructuring, but as long as I back it, we'll be OK," Mr.
Fredriksen said. "In the past, we've dealt with messier situations
than Seadrill, but we came through."
Patrick Fitzgerald
contributed to this article
Write to Costas Paris at costas.paris@wsj.com
(END) Dow Jones Newswires
August 24, 2017 12:09 ET (16:09 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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