Houston-based contract drilling company Diamond Offshore filed for Chapter 11 bankruptcy protection in Texas on Sunday. The company cited a drop in demand due to the ongoing coronavirus pandemic and the oil price war between OPEC and Russia. The company also said the market for its services “worsened precipitously” this year.
“After a careful and diligent review of our financial alternatives, [we] concluded that the best path forward for Diamond and its stakeholders is to seek Chapter 11 protection,” chief executive officer Marc Edwards said. “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.”
Diamond has posted losses totaling $1.2 billion over the last five years. It recorded losses in four of the last five years. In 2017, it recorded a profit of $18 million. It lost $357 million last year.
Diamond Offshore is the fifth publicly traded oil company to file for bankruptcy in the last 30 days as oil demand continues to drop, according to BankruptcyData.com. Continuous crude oil futures fell 22.6% in early trading Monday morning.
The company said it had about $2 billion in long-term debt as of Dec. 31, versus $156 million in cash. It listed Bank of New York Mellon as its largest creditor, with a combined $2 billion in claims. Its second-largest creditor, National Oilwell Varco, had about $6.2 million in claims.
“Diamond intends to use the proceedings to restructure and strengthen its balance sheet and achieve a more sustainable debt profile, while continuing to focus on safe, reliable, and efficient contract drilling services for its global clients,” the company said in a statement.
The company, which has significant operations in the Gulf of Mexico, said it had sufficient capital to fund operations during the reorganization. Hess and Occidental Petroleum are among its largest customers.
Diamond’s share price fell 61% Monday morning before trading was halted.