UK-based offshore service provider Valaris is reported to be considering its bankruptcy options, after weeks of cuts to its contracts.

On Tuesday, Reuters reported that Valaris was preparing for talks with creditors to agree bankruptcy terms. Unnamed sources told the news agency that Valaris has already appointed restructuring advisors.

This morning, shares in the company had lost 93% of their value compared to the start of the year.

The company has attracted concern from investors for some months now due to its high amount of debt. In its 2019 results, the company reported $6.5bn of outstanding debt, with a comparatively small $100m cash. Across the year, it made a net loss of $197m, despite a raw profit (EBITDA) of $22m.

Valaris is based in the UK and employs 5,800 people worldwide. Figures from the company show it still has a $1.9bn backlog of work from March 2020 onward.

On Tuesday, the company received notice from the New York Stock Exchange that its shares had fallen below the minimum price to be traded. The company said it would try to reinflate prices within the next six months.

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By GlobalData

“Amazed”: how Valaris got here

On Wednesday, the company gave an update on its fleet status, which analysis by Seeking Alpha said told “a sad story.”

“Valaris has experienced the most drastic fall-out that I have witnessed in the offshore drilling industry. I am still amazed at how quickly this company collapsed in such short notice.”

In March and April, the company saw two contracts end after early termination. Meanwhile, two other contracts were terminated before they began. With this, the company said it expects another seven vessels to operate on reduced hours or contracts in coming weeks.

Six drillships and five semi-submersibles are currently out of action, stacked for maintenance so they can be more easily redeployed when oil prices rise.

The company became Valaris after a merger of Ensco and Rowan in April last year. It will give its first quarter 2020 results on 30 April.

The company is also a 50% stakeholder in ARO Drilling, a joint venture with Saudi Aramco. In January, the joint venture ordered two new jackup rigs for $175m each.

The offshore supply chain is struggling badly at the moment, with many cancelled contracts and maintenance jobs across the world. At the start of April, US company Whiting Petroleum filed for bankruptcy, citing the low oil prices as the cause of its troubles.

Even before the coronavirus pandemic matured in Europe and the Americas, Forbes suggested 2020 would be a bad year for oil and gas bankruptcies. In 2019, Haynes and Boon logged 50 bankruptcies among oil and gas producers, midstream companies and service companies.

Canadian investors have held a large short position on Valaris since early March, betting the company would lose its worth since then.