Deepwater Driller Ocean Rig Files for U.S. Bankruptcy Protection

File photo credit: Ocean Rig

March 28 (Reuters) – Ocean RIG UDW Inc, a Cyprus-based rig contractor, filed for Chapter 15 bankruptcy protection in a U.S. court amid a deep and prolonged downturn in the industry.

Shares of Ocean Rig plunged 61 percent to 27 cents in morning trading on Tuesday.

The company had $3.25 billion in debt as of Dec. 31, according to its latest annual filing.

Ocean Rig said on Tuesday it had entered into an agreement with creditors representing over 72 percent of Ocean RIG’s debt for a financial restructuring.

Under U.S. bankruptcy laws, Chapter 15 grants a foreign company protection from creditors looking to seize its assets in the country.

As the price of crude has fallen by more than 50 percent since 2014, oil firms have cut back on rig hires, leaving many vessels idle and prompting owners to restructure operations to preserve cash.

However, global oil prices have rallied recently, prompting oil and gas producers to ramp up spending.

Some companies though have lagged as surplus offshore rigs built during the boom are now lying idle, while debt repayments must still be honored.

Bigger rival Seadrill, which is saddled with $14 billion in debt and liabilities, said last month that it may have to file for Chapter 11 bankruptcy protection if it fails to reach a restructuring agreement with its lenders. Last year, Hercules Offshore Inc filed for bankruptcy protection, just six months after emerging from its first bankruptcy.

Ocean RIG filed for bankruptcy in the United States Bankruptcy Court for Southern District of New York on Monday. (http://bit.ly/2o1GmI2) (Reporting by John Benny in Bengaluru; Editing by Anil D’Silva)

(c) Copyright Thomson Reuters 2017.

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