Rig contractor Diamond Offshore Drilling (DO) - Get Report filed for bankruptcy, saying its condition worsened “precipitously in recent months” as a price war and the coronavirus pandemic slammed crude oil prices.
The company listed $5.8 billion of assets and $2.6 billion of debt in a Chapter 11 petition filed in Houston, according to Bloomberg. Diamond Offshore has about $434.9 million of cash on hand, according to the petition.
In its filing, Diamond Offshore said conditions in its “highly competitive and cyclical industry” had “worsened precipitously in recent months.”
"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 CEO Marc Edwards. "Through this process, we intend to restructure our balance sheet to achieve a more sustainable debt level to reposition the business for long-term success."
Oil futures last week traded below zero for the first time in history as crude inventories have risen as global demand evaporated amid the coronavirus pandemic.
West Texas Intermediate crude contracts for June delivery were down 26.4% Monday, trading at $12.49 a barrel.
Shares of Diamond Offshore traded at nearly 94 cents, up 13.1% in trading Monday.
Diamond Offshore's bankruptcy adds to the more than 200 oilpatch bankruptcies dating from 2015, Bloomberg reported, citing a tally by the Haynes & Boone law firm.