US-based offshore support vessel owner Hornbeck Offshore Services (HOS) said it was working with its creditors to finalise the terms of a debt restructuring proposal that would be implemented through a Chapter 11 bankruptcy filing
Based in Covington, Louisiana, HOS said it would file a prepackaged Chapter 11 proceeding in US Bankruptcy Court in the Southern District Court in Texas. Since the sustained decrease in oil prices in 2014, HOS, like other OSV owners, has struggled in the oversupplied offshore vessel market, marked by significant cuts in offshore capex spending by oil companies for exploration and production, lower vessel day rates and lower utilisation levels.
One of the largest US-flag OSV owners, HOS reported in 2019 average utilisation levels for its new generation OSVs of 29.4% for the nine months ending 30 September, which was almost a 5% improvement in average utilisation over the same period in 2018.
The move by HOS comes as Brent crude oil tumbled to less than US$25 per barrel, price levels not seen since 1998. As recently as March, Brent was selling at US$51 per barrel, but has cratered amid the fallout between Saudi Arabia and Russia over production cuts and the global economic uncertainty caused by the Covid-19 pandemic.
Other US OSV owners, Tidewater, Gulfmark Offshore and Harvey Gulf International, have successfully restructured under Chapter 11 since the oil downturn in 2014.
In its most recent regulatory filing, HOS said its creditors have agreed not to exercise certain of their rights and remedies with respect to certain defaults by the company until 20 April 2020. During this period, HOS will negotiate and finalise a restructuring support agreement with its creditors that it plans to file with the bankruptcy court.