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Pacific Drilling: Letters Of Award For 2 Drillships Expire

Dec. 05, 2018 3:50 AM ETPacific Drilling S.A. (PACD), PACDD, PACDQ8 Comments
Vladimir Zernov profile picture
Vladimir Zernov


  • Pacific Drilling publishes its Q3 earnings results and fleet status report.
  • While the report is not that interesting since it does not show the fresh start accounting numbers, the fleet status report contains major developments.
  • Two drillships lost their chance for 2-year contracts. This is a material blow for Pacific Drilling and a warning for the whole drillship segment of the offshore drilling industry.

Pacific Meltem

Pacific Drilling (OTCPK:PACDD) (formerly (NYSE:PACD) and (OTCPK:PACDQ)) and has just emerged from bankruptcy and published its third-quarter earnings report and fleet status report. It turned out that these reports contained major news so, without further ado, let’s take a look at them.

First of all, I’d like to note that the company has not yet adopted fresh start accounting. In this light, taking a close look at Q3 balance sheet is not a useful exercise. At the same time, the company provided basic financials for the day it exited bankruptcy: “Upon emergence on November 19, 2018, we had approximately $401 million of cash, including $8.5 million of restricted cash, and excluding escrow funds set aside to settle professional fees incurred upon or prior to our emergence from our Chapter 11 proceedings. Total outstanding principal amount of debt was $1.024 billion”.

These numbers are not a surprise to anyone who followed the company during the restructuring process. Pacific Drilling significantly de-leveraged itself in bankruptcy and now has enough runway to try and make itself a profitable business or sell itself to a competitor: “Following our emergence from Chapter 11, our balance sheet is substantially improved, with no debt maturities until late 2023, giving us the financial strength to compete in the global market. We will be disciplined in use of cash and approach to the market as we pursue new contract opportunities”.

The important development for investors and traders interested in offshore drilling stocks is that the company has applied for its common shares to be re-listed on the NYSE. I’d expect the company to trade under its former ticker, PACD.

While the company’s earnings report was without surprises (I believe that fresh-start accounting report will be more interesting for investors), the fleet status report contained major news. Pacific Drilling started its

This article was written by

Vladimir Zernov profile picture
I'm a trader who trades both short-term and long-term. I started my career as a day-trader for a trading firm, but then turned to longer time frames and went on my own to manage my portfolio. I use technical analysis as well as fundamental analysis in my research.

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