The Valaris Group completed its financial restructuring emerging from chapter 11 bankruptcy proceedings as part of the ongoing restructuring taking place across the offshore sector. The reformatted company reports it eliminated $7.1 billion of debt while continuing to operate the largest fleet of offshore drillships, semisubmersibles, and jackups. Management also expressed cautious optimism in the outlook for the market.
"In the current commodity price environment, we are beginning to see the early signs of a recovery in customer demand following the downturn caused by the COVID-19 pandemic,” said Tom Burke, President and Chief Executive Officer of Valaris. “With the elimination of more than $7 billion of debt and an injection of significant additional capital, Valaris is positioned to take advantage of opportunities going forward."
Under the terms of the reorganization plan approved by the United States Bankruptcy Court for the Southern District of Texas on March 3, 2021, Valaris returns to the New York Stock after being delisted shortly after it filed for bankruptcy in August 2020. The new company raised $520 million in capital from an offering of new secured notes maturing in 2028. As of April 30, the company reports it has $615 million of available cash, $40 million of restricted cash, and $550 million of debt. A new, seven-member board of directors was also appointed.
Valaris previously announced as part of the bankruptcy negotiations it was extending delivery dates for two new drillship contracts with Daewoo Shipbuilding & Marine Engineering Co. The delivery dates were reset to December 31, 2023, while the company also has the option to take delivery early or terminate the contracts on a non-recourse basis.
"Today marks an important milestone as the company emerges from chapter 11 with a significantly strengthened capital structure," said Burke. "The last 12 months have been challenging from many perspectives. However, I am immensely proud of our employees' hard work and commitment over this period. Our offshore crews and shore-based staff remain focused on delivering safe, efficient, and reliable drilling services to our customers."
Valaris becomes the latest offshore drill operator to emerge from bankruptcy in recent months. At the end of 2020, Pacific Drilling completed bankruptcy proceedings only to be acquired three months later by Noble Corp., which had also completed a financial restructuring. Diamond Offshore Drilling emerged from bankruptcy early in 2021, but weeks later Seadrill, founded by John Fredriksen, filed for bankruptcy for the second time in just over two years.
Formed in 2019 through the combination of Ensco and Rowan Drilling, Valaris became the leader in the industry at a time when the ultra-deepwater market was continuing to show strong weakness from the collapse in the price of oil. The company began efforts to “right-size and streamline the organization,” but the substantial downturn in the sector, and later the impact of the pandemic, forced the company to use a bankruptcy filing to further restructure its operations to lower operating costs and its debt.
The Valaris Group emerges with a fleet that consists of 11 drillships, five semisubmersibles, and 44 jackups capable of operating across all geographies.