Houston-based oil driller Paragon Offshore will file for bankruptcy.
The Houston-based driller, which has rigs around the world, has been struggling with a heavy debt load. Paragon decided not to make a $15.4 million bond interest payment due Jan. 15, triggering a 30-day grace period before default. Paragon Offshore, spun off from Noble Corp Plc (NE.N) in 2014, said on Friday it has reached a restructuring agreement with its debtholders to reduce debt by more than $1.1 billion. The company had long-term debt of about $2.57 billion and $732 million in cash at Sept. 30, according to public filings. The company had hired Lazard Ltd (LAZ.N) and Weil, Gotshal & Manges LLP to explore strategic alternatives related to its capital structure. Paragon also said it reached an agreement with Noble, releasing the former parent from any claims related to the spinoff.
Paragon shares jumped on the news of the agreement but are still down about 90 percent in the past 12 months. They were trading at 31 cents at 9:52 a.m. in New York Friday. Noble climbed the most in more than seven years on the agreement, and the stock was trading at $7.66 at 9:54 a.m. in New York. Paragon is the latest oil service provider to head to bankruptcy court after oil prices fell more than 70 percent since June 2014. Many drillers have suspended activity because it’s no longer profitable. Offshore rig owners like Paragon face the dual problem of a glut of new drilling vessels entering the market just as customers are slashing spending. Hercules Offshore Inc., owner of the largest fleet of shallow-water drilling rigs in the Gulf of Mexico, said Thursday that it is exploring strategic alternatives just three months after emerging from bankruptcy.