Danger ahead for offshore services sector

Unmanageable debt and a shortage of work is wreaking havoc on company finances. Bruising maturities starting from next year could signal even more pain

Bankruptcies are starting to surge across the offshore oil services sector, with many high-profile names defaulting on their debt. London-based Valaris, the world’s largest offshore drilling contractor by fleet size, became the latest big-name casualty when it filed for bankruptcy on 19 August, joining UK rival Noble Corporation and US-based Diamond Offshore Drilling, which have both already succumbed to the economic downturn. And more bankruptcies are likely to follow. Offshore drilling contractors Transocean, Pacific Drilling and Seadrill are all in precarious positions and have highlighted either bankruptcy risk or the need for financial restructuring. “The offshore rig market is structur