Oil prices hit a low point in 2016, falling below $27 a barrel, a price not seen since 2003. The drop sent ripples across the industry, creating challenges for every player in the supply chain, from oil producers to pipeline companies. A year later, prices have recovered, and the sector is seeing indicators that the toughest of times are behind it. This is particularly true for the offshore oilfield services industry, a subsector that relies on increased oil exploration and production to rebound from the temporary lag in demand for construction services, rigs and support vessels. In response to the downturn, these businesses have had to find creative means to remain competitive, at times laying off a sizable number of their workforces, ceasing operations in certain geographic areas or consolidating.
Due to the sector’s hardships, critical lines of credit have been hard to come by. However, with signs of recovery, the financing environment for the companies that have successfully navigated the downturn may be improving as well, as evidenced by two recent deal closings totaling over $1 billion, both with the lead lender represented by Bracewell LLP. In the first deal, which closed on June 30, making it the first new credit facility for an offshore oilfield services company to close in 2017, Bracewell lead counsel Heather L. Brown represented a leading international financial institution in the closing of a $250 million senior secured amended and restated credit facility to Helix Energy Solutions Group, Inc. In the second deal, which also closed on June 30 within hours of the first transaction, Bracewell lead counsel Robin J. Miles advised Crédit Agricole Corporate & Investment Bank in the closing of a five-year amended $810 million senior secured revolving facility for McDermott International, Inc.
These two deals, as well as projected increased activity in offshore drilling, appear to mark a definitive turnaround within the offshore oilfield services industry.