|Bid||0.3800 x 2900|
|Ask||0.3399 x 1000|
|Day's Range||0.8625 - 1.0700|
|52 Week Range||0.6700 - 9.4300|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Earnings Date||May 04, 2020 - May 08, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||2.67|
The coronavirus hit retailers hard, causing businesses to file for bankruptcy across the world. Peter Kaufman, Gordian Group President joins Yahoo Finance’s On The Move panel to weigh in on the differences between chapter 7 and chapter 11 bankruptcy.
The COVID-19 coronavirus outbreak has sent global markets into bear territory and economies into recession. And as the pandemic stretches on, it's inducing a growing number of bankruptcy filings.Though, in most cases, COVID-19 has simply acted as the straw that broke the camel's back.Consider the retail industry, which has endured a particularly difficult past two months. Most "non-essential" retailers are feeling the pain, However, those that were already overloaded with debt, as well as suffering from long-term declines amid changing tastes and Americans' swelling adoption of online shopping, have been pushed over the edge.But it's not just retail. COVID-19 is forcing companies across several industries to seek out Chapter 11 bankruptcy protection and other types of relief. Consider the energy sector, where the oil declines of 2014-16 weakened a number of exploration and production companies, only to have coronavirus-sparked demand slumps finish off the job. Financially wobbly companies in the restaurant and entertainment industries are starting to collapse, too.Just remember: Bankruptcy filings aren't always "the end." In many cases, Chapter 11 reorganizations and other maneuvers help companies shed significant amounts of debt, allowing them to continue operating as they try to find a new way forward. That said, COVID-19 is threatening to knock a few well-known brand names out of existence entirely.Here are 14 companies whose recent bankruptcy filings can be chalked up to the COVID-19 outbreak. In most cases, these businesses were already showing signs of financial duress - the coronavirus merely delivered the coup de grâce. SEE ALSO: 21 Stocks Warren Buffett Is Selling (And 1 He Bought)
(Bloomberg Opinion) -- The huge financial aid package enacted by Congress this spring entailed a sprawling array of programs to direct funding, guarantee loans, relieve debt and more to support businesses laid low by a global pandemic. It also opened the door to a money grab. As a result, hundreds of millions of dollars are likely to end up in the pockets of oil and coal investors and executives in what may be the biggest campaign donor payoff in U.S. history.Failing oil and coal companies quickly moved to exploit the bailout as a financial lifeline. They had help. Seventeen Republican senators sent a letter in April to the Federal Reserve, effectively urging the use of coronavirus rescue funds to bail out bad coal and oil debt.In a separate letter to President Donald Trump, a group of three dozen senators and representatives argued that banks should be punished for “discriminating against America’s energy sector” by denying financing to sinking fossil fuel companies. Conservatives have long demanded that the market should decide such matters. But the oil patch plays by different political rules.Funneling taxpayer funds to failing companies in a declining industry that wreaks trillions of dollars in damage on the environment is not an easily justified investment. Yet the Federal Reserve, which sets loan guidelines for some of the rescue package, changed the rules of its “Main Street” lending program to allow companies to use taxpayer loans to pay off existing debt instead of retaining workers.Under pressure from Republicans, the Federal Reserve also increased the maximum loan amount in the Main Street program to $200 million. At the same time, the rules were tweaked so that credit ratings could be ignored. A separate bond buyback plan could end up bailing out 90 fossil fuel producers along with 150 electric utilities that have financial exposure to the sector, according to one analysis.In addition, a small business assistance program intended for mom and pop companies was raided early by coal and oil companies, which collected a combined $50 million. Three of the bailed-out companies have employed executives who have worked in the Trump administration, including the scandal-tarred former Environmental Protection Agency administrator, Scott Pruitt.When Democrats in Congress complained about public subsidy of environmental degradation and business failure, the Fed insisted that its program changes were not targeted to help coal, oil and gas companies. However, oil-state senators and Secretary of Energy Dan Brouillette couldn’t help bragging that the goal was exactly that.The largesse has little to do with preserving jobs. Coal and oil companies had already begun large-scale layoffs, and they won’t bring those workers back no matter how much money the government showers on them. The reason is elementary: The market wants less of their product. Some shale-oil drillers are paying to have oil taken off their hands because they have no place to store it. The rig count in the Permian Basin, around West Texas, fell by 50 percent in the past five weeks. As new wells are completed, employment will fall further. The decline in fossil energy long preceded Covid-19. Most of the nation’s coal companies had been through at least one bankruptcy. Shale oil producers lost a collective $189 billion over the past decade. In 10 of the last 11 years the oil industry was the largest issuer of junk bonds.The rationale behind the giveaways to favored oil, coal and gas interests isn’t economic, it’s simple smash-and-grab. According to Bloomberg News, Diamond Offshore Drilling Inc. obtained a $9.7 million tax refund through the rescue package. Then, it turned around and requested that a bankruptcy judge authorize that same amount in bonuses for nine executives.Republicans intend to redirect hundreds of millions from American workers into the pockets of investors who made bad bets on failing oil and coal companies. The source of the oil slick is in the swamp.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Carl Pope is a former chairman of the Sierra Club, an adviser to Michael R. Bloomberg and the author, with Bloomberg, of "Climate of Hope."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- As it headed toward bankruptcy, Diamond Offshore Drilling Inc. took advantage of a little-noticed provision in the stimulus bill Congress passed in March to get a $9.7 million tax refund. Then, it asked a bankruptcy judge to authorize the same amount as bonuses to nine executives.The rig operator is one of dozens of oil companies and contractors now claiming hundreds of millions of dollars in tax rebates. They are employing a provision of the $2.2 trillion stimulus law, called the CARES act, that gives them more latitude to deduct recent losses.“This is a stealth bailout for the oil and gas industry,” said Jesse Coleman, a senior researcher with Documented, a watchdog group tracking the tax claims. It’s geared to companies “that have been losing money over the last few years -- and now they get that money back as a check from the taxpayers. That’s exactly what the oil industry has been doing.”The change wasn’t aimed only at the oil industry. However, its structure uniquely benefits energy companies that were raking in record profits in 2018 as crude prices reached $76.41 per barrel, only to see their fortunes flip a year later.More than $1.9 billion in CARES Act tax benefits are being claimed by at least 37 oil companies, service firms and contractors, according to a Bloomberg News review of recent filings with the Securities and Exchange Commission. Besides Diamond Offshore, which declined to comment, recipients include oil producer Occidental Petroleum Corp. and refiner Marathon Petroleum Corp.Other oil companies say they didn’t lobby Congress for the change, which is widely available across all industries. “We did not request any benefit, but we are obligated to follow the tax laws as passed by Congress, which apply to all corporate manufacturers nationwide,” said Jamal Kheiry, a spokesman for Marathon, which got a $411 million benefit.Congress embedded the tax change governing losses in the stimulus measure early on, as lawmakers moved rapidly in March to steer trillions of dollars in aid to coronavirus-ravaged workers and companies. Alongside expanded unemployment payments and payroll loan programs, lawmakers saw an opportunity to harness the tax code to help get cash flowing to companies struggling to pay rent, workers and insurance.It “was sold as help for the little guy -- help for small business,” said Steve Rosenthal, a senior fellow with the Urban-Brookings Tax Policy Center. “In the name of ‘small business,’ we’re shoveling out billions of dollars to big corporations and rich guys.”The provision loosened rules governing how businesses deduct net operating losses -- incurred when deductible expenses exceed gross income. For years, companies were able to apply those net operating loss deductions to previous tax returns as well as going forward -- but Congress ruled out retroactive relief as part of the 2017 tax cut law.That new forward-focused approach works well when the economy is expanding, but the promise of using today’s losses as tomorrow’s deductions isn’t much help to coronavirus-battered companies with no guarantee they will survive long enough to claim them. So in the stimulus package, Congress gave businesses the chance to carry back all their losses -- and claim immediate tax refunds -- or five years from 2018, 2019 and 2020.“The thought was temporarily we should bring them back so that firms that are seeing significant losses in the next year or over the past year or two can carry those back and get some short-term liquidity,” said Garrett Watson, a senior policy analyst at the Tax Foundation, a non-profit that supports pro-growth tax policies.Traditionally, the ability to deduct net operating losses is meant to ensure companies get fair tax treatment even amid volatility, Watson said -- a plus for the notoriously boom-and-bust oil industry. “You are going to see the biggest benefits for firms like oil and gas that are seeing volatile profits -- and now, of course, extreme losses,” he said.The combination of big losses now and the congressional tax changes mean it may be years before some oil companies have to pay corporate income taxes at all.“We’re going to have some large losses this year,” ConocoPhillips Executive Vice President Don Wallette said in an April 30 earnings call. The company is in “a zero-tax-paying position in the U.S. and expect to remain there for quite some time,” Wallette said.There’s no limit on how the new refunds can be used -- and even bankrupt firms can get them.Consider Diamond Offshore. Once one of the world’s largest drilling rig contractors, it filed for Chapter 11 bankruptcy protection on April 26 after crude prices plunged along with demand for its high-tech drillships.In a first quarter filing, Diamond, which is majority owned by Loews Corp., said it had recognized a tax benefit of $9.7 million as a result of the carryback change. In an emergency motion filed with a federal bankruptcy court May 1, the company asked for the freedom to dole out $16.7 million in cash incentives to 85 of its 2,300 full-time employees, including as much as $9.7 million for nine senior executives.The company said at the time that deteriorating market conditions and the collapse of Diamond’s stock had made its existing equity-based bonus program “largely worthless.” The tax filing did not specify how the $9.7 million would be used.Dozens of other oil businesses have reported reaping the benefits, including $55 million for Denver-based Antero Midstream Corp., $41.2 million for supplier Oil States International Inc. and $96 million for Oklahoma-based producer Devon Energy Corp.Occidental Petroleum, which enlisted its employees to ask Congress to “provide liquidity to the energy industry,” said it now anticipates a cash refund of about $195 million as a result of the carryback provision and a separate change in the stimulus bill that allows the immediate refund of unused alternative minimum tax credits. An Occidental spokesperson declined to comment.Millions in RefundsNational Oilwell Varco Inc., a manufacturer of oil and gas equipment, expects a $123 million refund by carrying back its 2019 losses and applying them to its 2014 tax filing.San Antonio-based refiner Valero Energy Corp. recognized an extra $110 million by carrying back losses to 2015 -- when the corporate tax rate was 35% instead of the current 21%.Valero spokeswoman Lillian Riojas said that is tied to tax losses generated in the first quarter, since the company did not generate a net operating loss for federal income tax purposes in 2018 or 2019. And she said the actual refund will be dependent “not only on the company’s performance for the remainder of the year, but also on the impact” of other tax provisions.The benefits are “turbo-charged,” said Rosenthal, with the Urban-Brookings Tax Policy Center. That’s because businesses can carry back losses to offset income at a higher corporate tax rate of 35%, before the 2017 tax cut law lowered it 14 points. “Getting those losses at 35% is very, very favorable -- especially in 2020 when the losses are going to be devastatingly large.”The filings themselves reveal only part of the picture. Private companies are able to generate tax refunds too -- without disclosing it to the SEC. And while some public companies said they benefited from the tax break, they didn’t reveal by how much.For instance, refiner Phillips 66 boasted an effective income tax rate of just 2% for the first quarter -- well below the federal statutory income tax rate of 21% -- partly because of the carryback. But the company did not specify the amount of its expected refund.Dennis Nuss, a spokesman for Phillips 66, declined to comment when reached by phone Thursday. Representatives for Oil States, National Oilwell Varco, Antero and Devon didn’t respond to messages seeking comment.The importance of the provision hasn’t been lost on President Donald Trump’s administration. Energy Secretary Dan Brouillette recommended oil companies consider taking advantage of the expanded deduction in an April 21 interview with Bloomberg TV, calling it one of several “important liquidity tools that are going to help the industry.”Congressional tax analysts initially estimated that the expanded loss carryback provision would cost $25 billion over 10 years -- just when used by corporations. Now, some are questioning whether the final pricetag could be much higher, and Democrats are seeking to limit the value of the tax break after raising concerns it overwhelmingly helps corporations and the wealthy.In a new stimulus bill advanced Tuesday, House Democrats proposed scaling back the provision so companies could only apply losses back to 2018. Their plan also would prevent companies with “excessive” executive compensation or stock buybacks from claiming the tax break -- a change that would be retroactive back to March.Rosenthal stressed that it was logical for Congress to help businesses that were profitable before the pandemic. “But the CARES Act goes too far, tilting its benefits overwhelmingly to the wealthiest Americans,” he said in an essay. “I think Congress did not know the extent of what it was doing.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
KlaymanToskes ("KT"), www.klaymantoskes.com, announced today that it is investigating the damages sustained during the Coronavirus ("COVID-19") pandemic by employees and investors who held large positions in Diamond Offshore Drilling (NYSE:DO) stock at full-service brokerage firms. Investment portfolios holding large positions can carry significant downside risks. The investigation focuses on full-service brokerage firms’ negligence and mismanagement of large positions that resulted in employees and investors suffering substantial losses.
Ladies and gentlemen, thank you for standing by, and welcome to Loews Corporation's first- quarter 2020 earnings conference call. It is now my pleasure to turn the call over to Mary Skafidas to begin. Thank you, Maria, and good morning, everyone, and welcome to Loews Corporation's first-quarter earnings conference call.
(Bloomberg Opinion) -- Last week, Moody’s Investors Service published its quarterly report on covenant quality in leveraged loans. As usual, it painted a grim picture, with deals in the final three months of 2019 offering the worst investor protections ever seen.Its release has traditionally been yet another opportunity for market observers (myself included) to shake their heads at overeager investors so desperate for yield that they’re willing to give up typical safeguards. “If and when the credit cycle turns and the losses mount, they’ll have no one to blame but themselves,” I wrote on Jan. 24. “There’s no going back now: The risky debt markets are full of cov-lite deals. Investors either have to acclimate to that reality or get out of high-yield and leveraged loans,” I noted on Feb. 18, a week before markets began an epic free fall.Obviously, we’re well past the point of scolding now. Since late February, leveraged-loan prices tumbled from 97 cents on the dollar to as little as 76 cents. While they’ve recovered to 86 cents, loan mutual funds are still hemorrhaging cash and credit-rating companies are still downgrading swaths of companies that might not survive the coronavirus pandemic and economic shutdown. That, in turn, is starting to send shockwaves through the $700 billion collateralized loan obligation market, where a growing share of investors in the riskiest equity portions are seeing payments cut off to protect those in the structure’s top-rated tranches, which famously never defaulted during the last recession. The feeling of a cascading effect is palpable.As of now, the Federal Reserve has shown little appetite to forcefully intervene in this risky debt market. Yes, the central bank expanded its Term Asset-Backed Securities Loan Facility last month to include top-rated tranches of new CLOs. And it’s true that the recent widening of its lending facility for small and medium-size businesses would theoretically reach more distressed borrowers. However, some analysts have speculated that companies might be better off just defaulting and seeking bankruptcy protection now rather than kick the proverbial can down the road on their debt and deal with the facility’s limitations on certain corporate actions. Creditors might not be so keen on such a strategy. But it looks as if they won’t have as much say as in the past — one of the lasting consequences of eroding covenant quality. It suggests that if a wave of defaults and downgrades is averted, it’ll have to come first and foremost from C-suite decisions rather than from investors looking to maximize returns.“Having looser covenants takes that seat at the table away and lets the company manage its way through its distress,” Evan Friedman, head of covenant research at Moody’s, said in an interview. “That’s really what has been happening over the past decade with low default rates, more money coming in and a mandate to put that money to work — investors have forfeited that seat at the table and put more faith in the ability of these companies to manage their distress.”It’s still early days in the Covid-19 shakeout, but struggling companies are starting to pile up. In an April 22 report, Fitch Ratings cited Intelsat Investments, JC Penney Co. and Ultra Resources as just a few companies on their “Top Loans of Concern” list that missed interest payments while also accurately predicting that Neiman Marcus Group would default. Throughout corporate America, 71 U.S. companies with liabilities of more than $50 million have filed for bankruptcy already this year. That includes 19 in April, such as Cinemex Holdings USA Inc., Diamond Offshore Drilling Inc. and Frontier Communications Corp. J. Crew, which has become almost a verb in finance after the company put its brand name and other intellectual property into an entity beyond the reach of its existing lenders, also filed for bankruptcy.Covenant Review, a credit research firm, heralded the “return of the J. Crew Blocker” in a recent loan deal from Gap Inc. But the risk of a company “pulling a J. Crew” is just one of many worries in a market saturated with weak safeguards. “Top concerns for investors during these turbulent market conditions: the pursuit of distressed exchanges, the shifting of valuable collateral outside the control of creditors, and revolving lenders gaining an upper hand over institutional term lenders,” according to Moody’s.Yet the most troubling trend this time around, which the credit-rating firm has highlighted for years, is that a growing share of the market consists of companies that only ever borrowed with loans, rather than also issuing unsecured bonds. Leveraged loans usually fare quite well in a restructuring, recovering 77 cents on the dollar on average. But first-lien cov-lite loan debt cushions fell by almost half since 2010, to 17.9% from 33.2%, which is why Moody’s now sees 60% as a more likely recovery rate.“Leveraged loans did well in the last downturn in part just because there was a lot of junior capital on the balance sheet and they were often senior unsecured and senior subordinated bonds,” Christina Padgett, head of leveraged finance at Moody’s, said in an interview. “We haven’t seen a real history of distressed exchanges within bank-loan-only structures, but we expect that to be the case.”It’s hard to see what breaks this downward spiral. Among the alphabet soup of outlooks, some have contemplated a K-shaped path forward, with certain companies and segments of the economy bouncing back quickly while others crumble. As each day goes by with heavily indebted firms shuttered, leveraged loans look as if they’ll be part of the lower leg.Padgett noted that finding a way to push out a restructuring beyond the depths of a economic downturn could benefit both lenders and creditors: Investors get a better recovery rate, while companies receive a higher valuation. Meanwhile, private-equity firms are often able to come up with ways to keep a company viable, she said. There are certainly stories like this in the market. Bloomberg News recently singled out Surgery Partners Inc., a sprawling network of outpatient clinics that’s majority-owned by Bain Capital. It received a $120 million lifeline from investors in mid-April even though its outstanding loan signaled expectations for default in late March. “It all has worked out so fortuitously for the creditors and equity holders of Surgery Partners,” the reporters noted.This seems unlikely to be the norm. Just because April marked a banner month for risky debt doesn’t mean leveraged loans will return to their glory days. Creditors will surely be more vigilant — maybe they’ll keep an operator of surgical facilities afloat, but will be less inclined to hand over money to fledgling retailers or energy companies. Add to that the proliferation of cov-lite deals, and investors have little choice but to let companies take the wheel. For now, they’re just along for the ride.(Updates seventh paragraph to reflect that J. Crew filed for bankruptcy.)This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
There’s a lot of talk about how this might be the end of the shale sector, the end of the U.S. energy industry. that’s just not going to happen.
Stocks rose after Georgia, Oklahoma, Alaska and South Carolina began to reopen over the weekend. The Covid-19 pandemic had forced much of the nation into a shutdown. Other states are looking to loosen restrictions, as well.
Moody's Investors Service ("Moody's") downgraded Diamond Offshore Drilling, Inc.'s (Diamond) Probability of Default Rating (PDR) to D-PD from Ca-PD, and concurrently affirmed the Ca Corporate Family Rating (CFR) and senior unsecured notes ratings. The bankruptcy filing has resulted in a downgrade of Diamond's PDR to D-PD. Please refer to the Moody's Investors Service Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com.
Diamond Offshore Drilling, Inc. (NYSE: DO) ("the Company") today announced that the Company received notification from the staff of NYSE Regulation, Inc. ("NYSE Regulation") that it has determined to commence proceedings to delist the Company's shares of common stock. NYSE Regulation determined that the Company was no longer suitable for listing pursuant to Listed Company Manual Section 802.01D after the Company's April 27, 2020 disclosure that it and select subsidiaries have filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
Diamond Offshore sued Australian oil and gas producer Beach Energy Ltd for abruptly terminating a $65 million drilling contract, the offshore rig contractor that filed for Chapter 11 bankruptcy protection said. Diamond Offshore, which filed for bankruptcy protection on Sunday, said Beach terminated the agreement, claiming Diamond Offshore missed a "contractual milestone to deliver the rig." The Houston-based contract driller said the delay was "largely of Beach's own making" and an attempt to renegotiate the deal for more favorable terms.
Diamond Offshore Drilling announced its decision to file for bankruptcy. Yahoo Finance’s Jared Blikre joins the On The Move panel to discuss.
Diamond Offshore Drilling files for bankruptcy as a price war and the coronavirus pandemic slammed crude oil prices.
Offshore oil-services firm Diamond Offshore filed for bankruptcy protection on Monday, a move that wasn’t a big surprise but nonetheless caused the stock to plunge. The industry may be whittled down to a few larger players, one analyst says.
Loews Corp. said it expects to book a "significant" non-cash loss in the second quarter on its roughly 53% stake in Diamond Offshore Drilling Inc. , which filed for bankruptcy protection earlier Monday. In a filing with the Securities and Exchange Commission, Loews said the carrying value of its Diamond stake stood at $1.5 billion as of Dec. 31, 2019. "Loews is not responsible for, and does not provide guarantees of, the liabilities and obligations of its subsidiaries, including Diamond," said the filing. The company will no longer consolidate Diamond's results in its financial statements, effective April 26, the day the bankruptcy was filed. Loews shares rose then turned lower premarket, as Diamond Offshore tumbled 61%.
Shares of Diamond Offshore Drilling Inc. plummeted 61% toward a record low in premarket trading Monday, after the oil driller said it has filed for bankruptcy in the Southern District of Texas. The company said it plans to use the bankruptcy proceedings to restructure and strengthen its balance sheet, and achieve a "more sustainable" debt profile. Diamond said it had sufficient capital to fund operations during the reorganization and does not require additional post-petition financing. "After a careful and diligent review of our financial alternatives, the Board of Directors and management, along with our advisors, concluded that the best path forward for Diamond and its stakeholders is to seek chapter 11 protection," said Chief Executive Marc Edwards. "Through this process, we intend to restructure our balance sheet to achieve a more sustainable debt level to reposition the business for long-term success." The stock had plunged 80.4% over the past three months through Friday, while crude oil futures had dropped 73.2% and the S&P 500 had lost 12.5%.
Diamond Offshore Drilling, Inc. (NYSE: DO) ("Diamond" or "the Company") today announced that the Company and select subsidiaries have filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas (the "Chapter 11 Cases"). Diamond intends to use the proceedings to restructure and strengthen its balance sheet and achieve a more sustainable debt profile, while continuing to focus on safe, reliable, and efficient contract drilling services for its global clients.
Diamond Offshore Drilling Inc. (DO) on Sunday filed for bankruptcy proceedings as the contract driller grapples with the collapse in crude prices coupled with lower energy demand.The Houston-based energy exploration company, controlled by Loews Corp. (L), submitted the Chapter 11 petition at the U.S. District & Bankruptcy Court of the Southern District of Texas, according to a Bloomberg report. Offshore Drilling has $5.8 billion of assets and $2.6 billion of debt according to the Chapter 11 petition filed in Houston, citing year-end 2019 data. It has about $434.9 million of available cash, according to the filing.Diamond Offshore said that conditions worsened “precipitously in recent months,” citing a price war between OPEC and Russia and the Covid-19 pandemic.Diamond Offshore is joining a list of oil and gas producers who have been suffering from weak exploration demand as a result of coronavirus-related lockdowns and as U.S. crude prices have plunged almost 60% this year to less than $30 a barrel.The Chapter 11 filing will not come as a surprise to some analysts.Kurt Hallead, analyst at RBC Capital on April 21 downgraded Diamond Offshore to Sell from Hold and lowered the price target to $0.25 from $3, citing increased risk of a Chapter 11 bankruptcy filing."The fundamental outlook for the offshore drilling sector has radically changed with the Covid-19 economic impact and the collapse in oil price,” said Hallead. “Last week, DO missed an interest payment and hired legal and financial advisers to help determine capital structure alternatives."The remainder of Wall Street analysts have a Moderate Sell consensus rating on the stock based on 7 Sells and 6 Holds. The $2.67 average price target indicates 185% upside potential in the shares in the coming 12 months. (See Diamond Offshore stock analysis on TipRanks). Related News: Halliburton Incurs $1 Billion Quarterly Loss, Sees Spending Cuts Amid Oil Price Crisis Valero Maintains 7.5% Dividend Yield, Assuaging Investor Concerns Boeing Backs Out of $4.2 Billion Embraer Joint Venture Deal More recent articles from Smarter Analyst: * Tesla Secures 4B Yuan Loan For Shanghai Giga Expansion * Tesla’s Elon Musk Takes Legal Action to Fight Reopening of California Car Plant * Gilead’s Remdesivir Will Be Distributed By State Health Departments * United Airlines Scraps $2.25 Billion Debt Sale Due to Weak Investor Appetite
Diamond Offshore Drilling Inc filed for bankruptcy protection in Texas on Sunday, after the company recently skipped making an interest payment and said it had retained restructuring advisers. The Houston-based contract drilling company's filing, one of 15 of its group companies seeking protection under Chapter 11, said day rates and demand for its services had "worsened precipitously" this year amid a "price war" between OPEC and Russia and the steep drop in oil demand caused by the coronavirus pandemic. The company has significant operations in the Gulf of Mexico.
This rating action follows Diamond's announcement  that it has elected not to make the scheduled interest payment on its $500 million senior notes due 2039 and that it has hired advisors to assist in analyzing and evaluating the various alternatives with respect to its capital structure. "Diamond's decision to not make an interest payment shows that the coronavirus induced crash in oil prices and corresponding capital spending cuts by oil and gas producers has indefinitely deferred any potential recovery in offshore drilling activity and dayrates," commented Pete Speer, Moody's Senior Vice President.
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Diamond Offshore Drilling, Inc. New York, April 02, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Diamond Offshore Drilling, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
The company's Speculative Grade Liquidity (SGL) Rating was downgraded to SGL-3 from SGL-2. "The downgrade of Diamond's ratings reflects lower earnings and higher negative free cash flow in 2020 than we previously expected, combined with few signs that offshore drilling fundamentals are going to greatly improve anytime soon," commented Pete Speer, Moody's Senior Vice President.