Executive Summary

• Bankruptcy Context: Diamond Offshore filed for bankruptcy due to collapsing day rates for offshore rigs, reduced re-contracting opportunities, and broader industry challenges caused by COVID-19 and the oil price war between Saudi Arabia and Russia.

• Financial Position: At filing, Diamond Offshore had $499 million in cash, $1.4 billion in contract backlog, and a fleet valued at $4.32 billion, against liabilities of $3 billion.

• Investment Opportunity: Senior unsecured notes are trading at 10–12 cents on the dollar, with potential recovery scenarios offering returns of up to 173–303% depending on the reorganization plan outcomes.

• Asset Valuation: The rig fleet remains valuable despite market conditions, with liquidation estimates ranging from $669 million to $739 million, supporting the firm’s solvency despite liquidity challenges.

• Reorganization Scenarios: Three potential plans suggest varying leverage ratios and asset haircuts, all yielding positive returns for bondholders under current distressed prices.

Read time at 200 words per minute: ~25 minutes.