17 July 2020 by jbchevrel
Noble Corp (NE) is an operator of offshore oil and gas drilling rigs. This week, NE said it missed an interest payment Wednesday and is in talks with its creditors about a restructuring deal. NE has carried a heavy debt load for years, but business has dried up since COVID led to collapsing demand. NE has $3.7B in debt and missed a $15M payment on 2024 7.75% senior notes, starting a 30D grace period to cover that amount. Already in May, NE warned it might not be able to continue as a going concern because the pandemic was likely to cause it to burn through cash faster than projected. NE also lost access to a portion of a credit facility that is tied to its earnings. In Q1, NE posted a -$1.1B loss. They finished Q1 with $176M cash on Balance Sheet and $297M available under a credit facility. No real surprise as the CDS has been in mid90s (94%-96% range) for quite some time. For shareholders, this means a wipeout to 0. NE stock is already close to 0, so no big surprise either. Another offshore driller, Valaris PLC (ESV) disclosed that it will not make two payments that were due on Wednesday: a $7.6M interest payment on its 4.75% senior notes due 2024 and an $11.7M interest payment on its 5.85% senior notes due 2044. ESV, which surprised market participants earlier this month by electing to scrap 3 modern drill ships, said it has elected to enter a 30D grace period as well, expiring August 15. These two offshore drillers, NE and ESV, seem poised to join Diamond Offshore (DO) in the camp of defaulted offshore players. DO had filed for bankruptcy earlier this year.