S&P revises Shelf Drilling view to stable

S&P said it revised Shelf Drilling Holdings Ltd.’s outlook to stable from negative and affirmed its CCC+ ratings on the company and its debt.

“The outlook revision stems from the supportive oil price operating environment, which should support cash flow visibility, despite high leverage in our base case. On June 16, 2021, we raised our price assumptions for Brent crude oil for the remainder of 2021 to $65 per barrel (/bbl) from $60/bbl, and maintained our 2022 and 2023 assumptions at $60/bbl and $55/bbl, respectively. We believe recovery for the oilfield services sector will take time, despite rising oil prices, but anticipate the easing of production quotas based on the OPEC+ deal should support demand for oilfield services and contracts,” S&P said in a press release.

The outlook reflects the improving operating environment, and the company's long-term debt profile, with no maturities until 2024, despite leverage exceeding 10x and negative free cash flow generation in 2021-2022, on an S&P Global Ratings-adjusted basis, the agency said.

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