# Offshore Crisis, the 2020.... version **URL:** \ **Category:** Offshore\ **Created:** [April 27, 2020, 10:03am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169 "2020-04-27T10:03:21Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![ombugge](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/ombugge/32/11217_2.png) [@ombugge](https://forum.gcaptain.com/u/ombugge)\ **Post date:** [April 27, 2020, 10:03am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/1 "2020-04-27T10:03:21Z")
Then irt has started, the first offshore drilling contractor has filed for Chapt.11 protection: > **[Diamond Offshore Drilling files for chapter 11 -](https://splash247.com/diamond-offshore-drilling-files-for-chapter-11/)** > > US offshore driller Diamond Offshore Drilling filed for chapter 11 in the US Bankruptcy Court for the Southern District Texas (Houston) on Sunday. The company said that the recent drop in oil prices had worsened day rates and demand for its services,... Who will be next??? ---
**Author:** ![tengineer1](https://avatars.discourse-cdn.com/v4/letter/t/858c86/32.png) [@tengineer1](https://forum.gcaptain.com/u/tengineer1)\ **Post date:** [April 27, 2020, 12:41pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/2 "2020-04-27T12:41:39Z")
> [@ombugge](#): > > Who will be next??? Considering that Diamond is better off financially than most I’d say all of them are next. ---
**Author:** ![spork](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@spork](https://forum.gcaptain.com/u/spork)\ **Post date:** [April 27, 2020, 2:49pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/3 "2020-04-27T14:49:59Z")
> **[DOF Chairman to Resign after 18 Years in Position](https://www.oedigital.com/news/477932-dof-chairman-to-resign-after-18-years-in-position)** > > Norwegian offshore vessel operator DOF has said Helge Møgster will be resigning from the Board of Directors in DOF ASA following… ---
**Author:** ![ombugge](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/ombugge/32/11217_2.png) [@ombugge](https://forum.gcaptain.com/u/ombugge)\ **Post date:** [April 27, 2020, 4:22pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/4 "2020-04-27T16:22:55Z")
Don’t read too much into that Helge Møgster step down as Chairman of DOF ASA. He is still in charge of the family holding company that hold the biggest shear in DOF ASA and their subsidiaries (AWA two of the largest companies within aquaculture and seafood processing in Norway: > **[Helge Møgster](https://no.wikipedia.org/wiki/Helge_M%C3%B8gster)** > > Helge Arvid Møgster (født 1953) er en norsk forretningsmann innen sjømatproduksjon og oljeservice fra Storebø i Austevoll, i 2019 hadde han en formue på 5,9 milliarder. > Han kommer fra en fiskerfamilie og er selv utdannet fiskeskipper. I 1980-årene lånte Helge Møgster og broren Ole Rasmus penger av faren for å kunne begynne for seg selv. I 2008 var Helge og Ole Rasmus Møgster to av tre milliardærer i den norske fiskeindustrien; den tredje var Kjell Inge Røkke, som de også hadde vært kompanjonger ... His background as a fishing skipper and fishingboat owner in his younger days (he is still a major owner of fishing vessels) makes him eminently capable of running a fleet of boats, but maybe less so in handling a financial crisis. (Which he recognize more than anybody) Hans Olav Lindal, with a background as a maritime and financial Lawyer: > **[Hans Olav Lindal](https://www.thommessen.no/en/people/hans-olav-lindal)** > > Hans Olav Lindal is admitted to the Supreme Court of Norway. He works mainly with M&A and legal matters related to Shipping, and assists ship owners and other clients with matters concerning contract law, corporate law and financing. He has... May be more suitable in the chair during this process. Rest assured that Helge Møgster will keep an eye on whatever is going on and have something to say if it is not to his liking. PS\> He will not be swearing, that is for sure. ---
**Author:** ![m\_sailor](https://avatars.discourse-cdn.com/v4/letter/m/50afbb/32.png) [@m\_sailor](https://forum.gcaptain.com/u/m_sailor)\ **Post date:** [April 27, 2020, 7:54pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/5 "2020-04-27T19:54:39Z")
This is going to be a terrible ride because some of us will keep crappy jobs and some of us will be working at Lowes. In the long term, it could force reactivation costs to rise significantly. Many supply boat operators were preparing for the steady rise in day rates to send their vessels through 5 year dry docks. Drillship operators were expecting to pull ships out of the stack fleet and buy upgrades. Now that these vessels will stay laid up or be laid up again, it could force them to become uneconomical forever. I would not be surprised by second bankruptcies (Seadrill) or mergers. That being said, oil companies have been coasting on their proven reserves for quite some time. It’s been a statistic in every quarterly report from every publicly traded drillship company. Most of them were statistics from Rystad. The oil major’s functions are shareholder returns and the ability to find and produce oil. They have barely done the latter since 2014. Now they are all in panic mode to protect cash flow and stay liquid by cutting capital expenditures. It’s also important to recognize that the Saudi’s goal was to target and shut in onshore production. Some of these onshore wells, like the ones in Russia, may never produce again. Coronavirus is also the first real global problem since WW2, so everyone is still figuring out how to handle it and maintain a supply chain. ---
**Author:** ![ombugge](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/ombugge/32/11217_2.png) [@ombugge](https://forum.gcaptain.com/u/ombugge)\ **Post date:** [April 27, 2020, 8:25pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/6 "2020-04-27T20:25:10Z")
Yes it is not going to be nice. I though the last one was bad, but… Glad to be retired and receive a monthly payment from the Norw. Govt. directly into my account Not dependent on any company, bank savings, or the stock market (which is also going to be bad(??)) ---
**Author:** ![SeaEagle](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/seaeagle/32/17788_2.png) [@SeaEagle](https://forum.gcaptain.com/u/SeaEagle)\ **Post date:** [April 27, 2020, 9:17pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/7 "2020-04-27T21:17:59Z")
Same here. Different avenues, but glad to be retired. Seen this too many times. Feast or Famine. ---
**Author:** ![shipengr](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/shipengr/32/485_2.png) [@shipengr](https://forum.gcaptain.com/u/shipengr)\ **Post date:** [April 28, 2020, 3:38am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/8 "2020-04-28T03:38:59Z")
> [@ombugge](#): > > Who will be next? Looking like possibly Valaris. Dropping that BOP and losing their cash-cow contract had to hurt: > **[Valaris explores bankruptcy options as contracts dry up](https://www.offshore-technology.com/news/valaris-bankruptcy-supply-chain/)** > > UK-based offshore service provider Valaris is reported to be considering its bankruptcy options, after weeks of cuts to its contracts. After that, keep an eye on Noble. > **[Noble Corp. Will Soon Hit The Liquidity Covenant On The Credit Facility...](https://seekingalpha.com/article/4339763-noble-corp-will-soon-hit-liquidity-covenant-on-credit-facility)** > > Noble Corp. reports that it borrowed an additional $100 million to repay secured loans on two newbuild rigs that it purchased not long ago. We’ll see what Transocean reports later this week on their earnings call. They may have backlog and credit revolvers, but they are carrying a ton of debt and stacked rigs. ---
**Author:** ![oakley23](https://avatars.discourse-cdn.com/v4/letter/o/94ad74/32.png) [@oakley23](https://forum.gcaptain.com/u/oakley23)\ **Post date:** [April 28, 2020, 4:05am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/9 "2020-04-28T04:05:20Z")
> [@shipengr](#): > > Looking like possibly Valaris. Dropping that BOP and losing their cash-cow contract had to hurt: There wasn’t that much time left on that contract and it wasn’t a hell of a percentage of their backlog. I would think Noble first and then Valaris. Mostly depends on how strong their balance sheets are. They also had loss of hire insurance that’s gonna kick in. That BOP/Contract has minimal impact on bankruptcy. Total was paying a stupid high rate for that rig anyways. ---
**Author:** ![shipengr](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/shipengr/32/485_2.png) [@shipengr](https://forum.gcaptain.com/u/shipengr)\ **Post date:** [April 28, 2020, 4:28am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/10 "2020-04-28T04:28:37Z")
It’s not just about the percentage and time for that rig. It’s about the day-rate vs operating cost. Most rigs with rates in the high 100’s-low 200’s/day are earning just over breakeven for operating cost. That’s why backlog doesn’t necessarily mean ability to pay down debt right now. That rig, at 620/day was a larger contributor to Valaris’ income/profit for the fleet. While they had loss of contract insurance, until that pays out they are out almost $150 million income in the near term. And from the deductible waiting period, they are still out a firm $28 million at a really bad time. It was already announced they are working with a well known restructuring advisor. ---
**Author:** ![tengineer1](https://avatars.discourse-cdn.com/v4/letter/t/858c86/32.png) [@tengineer1](https://forum.gcaptain.com/u/tengineer1)\ **Post date:** [April 28, 2020, 5:23am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/11 "2020-04-28T05:23:53Z")
> [@oakley23](#): > > There wasn’t that much time left on that contract and it wasn’t a hell of a percentage of their backlog. I would think Noble first and then Valaris. Mostly depends on how strong their balance sheets are. There is no strength in an OSD company balance sheet when oil is over $100/bbl much less now. In 2011 or so RIG got a Baa3 out of Moody’s some how. That’s one step above junk and about the highest I’ve seen for an OSD company. Most stay in the junk territory. The OSD business is not designed for long term investment. They run on debt, pay the guys running the company LOTS of money, pay the gamblers buying the bonds high interest rates until they don’t. The drillships are built to last 10 years but get stretched to 20+ depending on the price of oil. These guys know their business goes up and down like a yo-yo with the price of oil so they do not have a long term business model. Knowing this they pay themselves very well when times are good. If you work with them on the upswing and bank your money you can do well. ---
**Author:** ![shipengr](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/shipengr/32/485_2.png) [@shipengr](https://forum.gcaptain.com/u/shipengr)\ **Post date:** [April 28, 2020, 6:02am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/12 "2020-04-28T06:02:29Z")
> [@tengineer1](#): > > The drillships are built to last 10 years but get stretched to 20+ depending on the price of oil Just to point out, that’s the true gremlin lurking in the balance sheets. Assets are being retired younger and younger, but they’re being depreciated over more than 20 yrs on paper, so the true book value is even less than published since these stacked rigs should essentially be valued at scrap. ---
**Author:** ![tengineer1](https://avatars.discourse-cdn.com/v4/letter/t/858c86/32.png) [@tengineer1](https://forum.gcaptain.com/u/tengineer1)\ **Post date:** [April 28, 2020, 6:46am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/13 "2020-04-28T06:46:49Z")
> [@shipengr](#): > > Assets are being retired younger and younger, but they’re being depreciated over more than 20 yrs on paper, so the true book value is even less than published since these stacked rigs should essentially be valued at scrap. Very true. I remember when RIG was stacking jackups in Malaysia and counting them as assets. That was a joke unless there is a market for rust. There are “assets” rusting away in Trinidad and other locations now. To properly lay up a rig is very expensive and most don’t bother. Activating a rig after any lengthy lay up is most times not worth the expense but they look good when bond salesmen make their presentations to foolish investors chasing yield. Diamond will lose their number one investor but should survive in some form. Noble has been rising from the dead forever, RIG might survive and maybe Valaris. Seadrill is toast 😃 ---
**Author:** ![Kraken](https://avatars.discourse-cdn.com/v4/letter/k/f07891/32.png) [@Kraken](https://forum.gcaptain.com/u/Kraken)\ **Post date:** [April 28, 2020, 8:05am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/14 "2020-04-28T08:05:08Z")
![20200409_090904](https://us1.discourse-cdn.com/flex016/uploads/gcaptain_maritime_forum/original/2X/b/b4de17df4c3478993173cdc692e73a59218dfb85.jpeg) ![20200409_090859](https://us1.discourse-cdn.com/flex016/uploads/gcaptain_maritime_forum/original/2X/7/717e9e4185e58d479ba8bcc468ec84df0742bd3a.jpeg) ![20200409_095402](https://us1.discourse-cdn.com/flex016/uploads/gcaptain_maritime_forum/original/2X/2/2fdef104857e293c96a7b11c57ac0f6a846380c3.jpeg) ![20200409_102500](https://us1.discourse-cdn.com/flex016/uploads/gcaptain_maritime_forum/original/2X/f/fdee0e5ca660fb453a9c037944d583c798b183c6.jpeg) ![20200409_104046](https://us1.discourse-cdn.com/flex016/uploads/gcaptain_maritime_forum/original/2X/e/e48339f3d8a27870ba8a5993ddd6f016529b0e20.jpeg) ![20200409_115950](https://us1.discourse-cdn.com/flex016/uploads/gcaptain_maritime_forum/original/2X/1/1609ae8194f85a029b12afc8a9a749fd832d3772.jpeg) Invergordon, a lot of Noble drilling rigs. ---
**Author:** ![spork](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@spork](https://forum.gcaptain.com/u/spork)\ **Post date:** [April 28, 2020, 2:02pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/15 "2020-04-28T14:02:20Z")
> **['Thousands' of oil and gas jobs under threat](https://www.bbc.co.uk/news/uk-scotland-scotland-business-52446555)** > > The UK's oil and gas industry says many firms will struggle to survive through the coronavirus crisis. ---
**Author:** ![spork](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@spork](https://forum.gcaptain.com/u/spork)\ **Post date:** [April 29, 2020, 11:53am UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/16 "2020-04-29T11:53:48Z")
> **[BP sinks to £3.6bn pre-tax loss as Covid-19 and oil price plummet take effect...](https://www.energyvoice.com/oilandgas/237802/bp-sinks-to-3-4bn-pre-tax-loss-as-covid-19-and-oil-price-plummet-take-effect/)** > > Energy giant BP fell to a £3.6billion pre-tax loss in the first quarter of 2020 as the coronavirus and oil price slump made its impact on the business. ---
**Author:** ![c.captain](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/c.captain/32/807_2.png) [@c.captain](https://forum.gcaptain.com/u/c.captain)\ **Post date:** [April 29, 2020, 3:09pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/17 "2020-04-29T15:09:53Z")
I am not returning to the forum but cannot believe no one has started a thread on this news? Diamond in bankruptcy now with Noble to be filing very soon then will be Valaris and Pacific. There is not one drilling contractor not on the ropes buried in debt and with little to no work for the many dozens of rigs built between 2010 and 2015 when the sky was the limit and the building boom we witnessed as unprecedented. Dayrates for those rigs managing to pick up work now is in the toilet with the world awash in crude. Shareholder equity is utterly destroyed with stock in these companies becoming worthless after restructuring but even then with new shares being held by those holding the debt of these companies, the question is with far too many rigs built years ago for the demand of today and the future, some drillers will need to die and forever go away. Yes, I believe one of these companies will be Noble. As drilling contractors are cremated, what they have which might have value will ultimately be sold at a massive discount by creditors in some distant future to whoever might have some cash to spend. I expect a $650M 6th generation drillship going for $50M or even less after 5 years of sitting idle. Then there are the support vessels and their owners. HOS is now bankrupt and I cannot believe even ECO is not seriously sucking wind. There will be blood in the gutters soon with these companies! What was an industry barely surviving pre-Covid is now a dead industry no longer viable and absolutely, positively going to shrink drastically to a tiny fraction of what it once was. This is going to get very, very ugly over the next 12 months. I am certainly glad to now be a spectator on the sidelines and not going to be drenched by the bloodbath. ---
**Author:** ![portofdc](https://avatars.discourse-cdn.com/v4/letter/p/8797f3/32.png) [@portofdc](https://forum.gcaptain.com/u/portofdc)\ **Post date:** [April 29, 2020, 3:18pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/18 "2020-04-29T15:18:01Z")
Come on back, c.captain. It hasn’t been the same without you. Why should I have to suffer the gassy rhetoric of bugge, without the pleasure of your sharp wisdom? ---
**Author:** ![SeaEagle](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/seaeagle/32/17788_2.png) [@SeaEagle](https://forum.gcaptain.com/u/SeaEagle)\ **Post date:** [April 29, 2020, 3:18pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/19 "2020-04-29T15:18:21Z")
I miss you C.Captain. Don’t always agree with you, but miss that salty rhetoric that does make sense at more times than not. Come on back big guy, if the powers that be let you. You are a welcome neighbor I used to have on the patio. ---
**Author:** ![Klaveness](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.gcaptain.com/klaveness/32/7001_2.png) [@Klaveness](https://forum.gcaptain.com/u/Klaveness)\ **Post date:** [April 29, 2020, 3:25pm UTC](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169/20 "2020-04-29T15:25:47Z")
You’re back! It has been a quiet time, my friend. [Next page](https://forum.gcaptain.com/t/offshore-crisis-the-2020-version/55169.md?page=2)