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The world's largest offshore rig operator Transocean has hired Lazard to advise it on strategic alternatives for its capital structure, Bloomberg has reported, citing a company statement.
Transocean reported a net loss of $497 million for the second quarter of the year, compared to a negative result of $392 million for the first quarter. Still, the offshore rig operator also reported an increase in contract drilling revenues for the second quarter, at $930 million, up from $759 million for the first quarter of the year.
The offshore drilling rig segment of the energy industry has been among the ones hardest hit by the crisis, especially since it hadn't yet had time to recover from the previous one. Offshore rig operators already had an oversupply of rigs when the 2014-2016 crisis came, Bloomberg notes, and they have been struggling since then as many upstream companies abandoned their offshore efforts in favor of cheaper shale.
Some did not survive, such as Diamond Offshore Drilling, which filed for Chapter 11 bankruptcy protection in April, as oil prices slumped to $20 a barrel. With a debt pile of $2.6 billion, according to the Financial Times, Diamond Drilling said the move was motivated by the unprecedented oil price crash, saying in its filing that conditions in the oil industry had "worsened precipitously in recent months."
Then it was Noble Corp's turn. The drilling contractor filed for bankruptcy last Friday, after failing to make a $15-million interest payment on a loan. The company had accumulated a debt load of some $4 billion.
"The fundamental problem that Noble faces is that its entirely unsecured capital structure was built for a very different offshore market environment, where activity levels and drilling dayrates were high enough to support the significant capital that had been deployed to expand and upgrade its fleet in response to the market demand in this structurally different market," the company's chief executive, Richard Baker, said.
It is perhaps in anticipation of more of the negative effects of this changed market environment that Transocean is acting now with its restructuring.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.