THE LARGEST OWNER OF THE OFFSHORE DRILLING RIGS FILES FOR BANKRUPTCY IN THE USA

The British company "Valaris" (Valaris Plc) has become one of the last victims of the global drop in oil prices. On August 19, it filed for bankruptcy by filing a petition in an American court located in the Southern District of Texas. Thus, the world's largest owner of the offshore oil production facilities is trying to restructure the existing debt burden of $ 7.85 billion.

The company was forced to go to court due to the missed payments on bonds. The representatives of Valaris noted that it was able to conclude a restructuring agreement with almost half of the bondholders and receive half a billion dollars to pay for the bankruptcy proceedings. The company’s own assets were estimated at $ 13 billion.

Until recently, Valaris has owned about 74 offshore drilling rigs, including 50 jack-up rigs, 16 drillships and 8 semi-submersible rigs.

The company is expected to exchange its revolving credit line and unsecured bonds for shares.

This will allow the company to reduce its debt by $ 6.5 billion. The issuance of the new bonds for $ 0.5 billion has also been supported by the current holders of the company's securities.

According to the company’s CEO, Tom Burke, in the future, this step will allow to create a stronger company, capable of adapting to the long-term recession in the oil industry, which is predicted by the experts. At the same time, the company will continue to serve the customers without any interruption, despite the bankruptcy.

The experts note that the offshore oil industry has been experiencing serious difficulties since 2016, when the prices for hydrocarbons fell to $ 30 per barrel. And this happened after the quotes reached $ 100 in mid-2014.

It is known that the new projects in the field of deep water drilling are cheaper than the previous ones, but even they require significantly more time and effort than surface shale wells.

Given the massive bankruptcy of American shale companies, it is not surprising that offshore oil rig owners are facing even greater difficulties.

In fact, as it was noted by many analysts, Valaris has joined the bankruptcy proceedings previously launched by its competitors such as Noble Corp. and Diamond Offshore Drilling Inc. In August 2020, Pacific Drilling SA announced the possibility of bankruptcy (for the second time in the last three years). Another major owner of deepwater oil rigs, Transocean Ltd., also stated it was looking for the strategic alternatives.

The history of Valaris goes back to 1975, when, after the 1973 oil crisis, John R. Blocker bought the Texas-based Choya Energy Company and renamed it Blocker Energy. The name Valaris occured after the merger of Ensco Plc (Blocker Energy's successor) and Rowan Companies Plc last year.