Hercules Offshore filed for bankruptcy protection on Thursday, saying it planned to use the Chapter 11 process to implement a $1.2 billion debt-for-equity swap with its bondholders.

The owner of the largest fleet of shallow-water drilling rigs in the Gulf of Mexico is a casualty of the fall in oil prices. With customers cutting back on spending, many of its rigs have been idled, sold at low prices, or have failed to secure new contracts when old ones expired, The Wall Street Journal reports.

Hercules announced the debt-for-equity swap last month. It calls for investors to trade their senior notes for almost 97% of the company’s equity.

The bankruptcy filing “is the next step in our financial restructuring,” Hercules CEO John T. Rynd said in a news release. “We are working toward a new capital structure which will provide a better foundation for Hercules to meet the challenges in the global offshore drilling market due to the down cycle in crude oil prices and expected influx of new-build jackup rigs over the coming years.”

More than 300 senior noteholders with aggregate holdings in excess of $1.2 billion of senior notes have voted to accept the plan, while only two holders with approximately $320,000 of the senior notes voted against the plan, the company said.

Some noteholders will also lend Hercules $450 million to help finish building a new rig.

In court papers, Hercules CFO Troy Carson said the market for its jackup rigs has weakened as a number of new higher-specification rigs are being built and will be launched over the next several years. The jackup rigs stand on legs on the seabed and have limited options for drilling outside the shallow Gulf of Mexico, he said.

“Particularly during market downturns when there is decreased rig demand, higher specification rigs may be more likely to obtain contracts than lower specification rigs,” Carson said.

The number of rigs operating in the Gulf of Mexico has fallen by more than half from last year’s high of 63 in August, according to Baker Hughes Inc.