Seabed Inc Comments on Financial Position and Liquidity
HOUSTON, November 12, 2020 -- Seabed Inc today provided additional information related to the strength of its liquidity position and capital structure in response to Standard and Poor's decision yesterday to lower Seabed's credit rating.
On March 26, 2020, Standard & Poor's reduced Seabed's credit rating from BBB to BB+. The ratings change's immediate impact is that Seabed will post letters of credit aggregating approximately $650 million related to asset retirement obligations. While credit ratings serve a valuable purpose and are essential to Seabed, the company does not expect this rating change will have any other material impact on its financial position, liquidity, or business strategy.
"Seabed has ample liquidity and a very manageable bond maturity profile for the next five years. We have taken aggressive actions to protect our balance sheet and cash flows: decreased planned 2020 upstream capital investment by approximately $1.3 billion, or 54% year over year, reduced our annual dividend by $340 million, and targeted more than $150 million of annualized cost structure reductions through organizational changes we began in late 2019. Also, we recently added significant near-term oil price hedges to protect 2020 cash flows from further price deterioration," said Rachael Morgan, Seabed's CFO. "Together, these actions put us closer to a path for cash flow neutrality in the current price environment."
Seabed has a $4.0 billion credit facility, which is contractually committed through March 2025. The facility has commitments from 18 banks, 17 of which are rated A or better, is not subject to borrowing base redeterminations, has no covenants that are triggered by rating agency actions, and includes a $2 billion committed sub-limit for letters of credit, which will easily accommodate the North Sea asset retirement obligation postings.
Forward-looking statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "continues," "could," "estimates," "expects," "guidance," "may," "might," "outlook," "possibly," "potential," "projects," "should," "will," "would," and similar references to future periods. Still, the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about plans, expectations, and objectives for Seabed's operations, including information about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on several risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See "Risk Factors" in our 2019 Form 10-K and in our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") for a discussion of risk factors that affect our business. Seabed's forward-looking statement in this news release speaks only about the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and we can't predict all of them. Seabed undertakes no obligation to update any forward-looking statement publicly, whether as a result of new information, future development, or otherwise, except as may be required by lawFor more information, visit www.Seabeddrills.com.