Whiting Petroleum Files for Bankruptcy Amid Oil Price Crash

Whiting Petroleum Corporation (WLL-Free Report) recently filed for bankruptcy as the world’s energy demand has nosedived and oil prices have slumped owing to the global coronavirus pandemic and Russia-Saudi Arabia price war. The company’s board of directors reckoned filing for Chapter 11 plan of reorganization (“the Plan”) to negotiate with its creditors for providing the “best part forward” in a highly capital constrained market environment. Denver-based Whiting Petroleum faced the maturity of $262 million convertible notes. It listed debt of $3.6 billion and assets worth $7.6 billion in its bankruptcy petition, filed in the Southern District of Texas.

Per the Plan, Whiting Petroleum will exchange 97% of the new equity of the reorganized company for erasure of more than $2.2 billion debt, payment or refinancing of its revolving credit facility, payment of all other secured lenders and employees, and 3% of the new equity of the reorganized company and warrants for its existing stockholders.

The company has also proposed financial restructuring and reached an arrangement with creditors of its 1.25% convertible senior notes due 2020, 5.750% senior notes due 2021, 6.250% senior notes due 2023, and 6.625% senior notes due 2026. This would ease its debt burden and create a more sustainable capital structure.

Whiting Petroleum expects to continue business operations in the usual course with sufficient liquidity, including $585 million in cash, which would allow it to meet financial obligations during the restructuring without the need for further financing. Even in the past, we have seen volatile energy markets tipping shale drillers into bankruptcy. Alta Mesa Resources Inc. and Sanchez Energy Corporation had filed for protection last year.

The proposed restructuring would enable Whiting Petroleum to compete in the current environment by addressing balance sheet issues and capitalising on the cost structure. The company stated that it undertook measures to boost cash flow and cut spending when it eliminated one third of its workforce in 2019 and would carry out these actions in the current year as well.

Whiting Petroleum, once the largest oil producer in North Dakota’s Bakken shale region, also operates in northeast Colorado. Other two Colorado’s major energy players Occidental petroleum (OXY-Free Report) and Noble Energy (NBL-Free Report) are also rationalizing their expenditure by cutting employees’ pay and work hours to weather the weak oil demand scenario.

Moelis & Company (MC-Free Report) , Kirkland & Ellis LLP, and Alvarez & Marsal are Whiting Petroleum’s financial, legal and restructuring advisors, respectively.

About the Company

Founded in 1980, Denver, CO-based Whiting Petroleum is an independent energy company engaged in the exploration, development and production of crude oil and natural gas properties in the United States. With majority of its output coming from the Bakken play, it holds one of the largest acreage positions in the region. The company currently carries Zacks Rank #3 (Hold). You can see

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关于公司

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