US, WASHINGTON (ORDO NEWS) — Oil company Diamond Offshore Drilling filed for bankruptcy. Thus, it became the second most important victim of the collapse of the oil market after Whiting Petroleum filed a similar application this month.
According to the Financial Times, Diamond Drilling, whose debt is $ 2.6 billion, said the move was caused by an unprecedented drop in oil prices. In a statement, the company noted that conditions in the oil industry “have deteriorated sharply in recent months.”
According to Bloomberg, at least 7 North American oil companies have crashed since the beginning of the year before WTI and other oil brands went into negative territory last week. Lenders were forced to abandon their claims for paying off debts that they presented to troubled oil players. It was necessary to avoid the complete depreciation of assets amid falling demand for oil due to the global coronavirus pandemic.
Diamond Drilling said it was trying to borrow even more money to prevent a catastrophe, and took other steps to avoid bankruptcy. But all to no avail. Bloomberg notes that Diamond Drilling is at a disadvantage compared to other drillers because it focuses on offshore drilling: it is much more expensive than offshore drilling.
According to experts, it is worth preparing for even more bankruptcies. This month, Rystad Energy warned that 533 US oil companies would go bankrupt if oil remained at $ 20 a barrel.
“$ 30 is already so bad, but as soon as you reach the price of $ 20 or even $ 10, this will turn into a real nightmare,” said Artyom Abramov from Rystad. He added: “At a price of $ 10, almost every American company burdened with debt will have to file for bankruptcy or consider other strategic options.”
Motley Fool, an investment company, has interviewed energy experts about which companies may also file for bankruptcy. When the survey was published last Friday, Diamond Drilling was among them. The other three companies that are most at risk are Chesapeake Energy, Occidental Petroleum and Callon Petroleum.
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