Credit & Capital

Whiting Petroleum Files for Bankruptcy Amid Oil Price Plunge

The company has enough liquidity to keep operating during the restructuring without the need for additional financing.

Whiting Petroleum announced it has reached an agreement with noteholders to pursue a consensual financial restructuring after filing for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas.

The shale producer at one time was the largest oil producer in North Dakota’s Bakken region with a market cap of $15 billion in 2011. It was expected to produce about 42 million barrels of oil equivalent in 2020.

West Texas Intermediate was trading at $20 per barrel Wednesday morning.

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“In 2019, we took proactive steps to reduce our cost structure and improve our cash flow profile. We continue to build on these actions in 2020,” Whiting’s chairman and chief executive officer Bradley Holly said in a statement. “The company has also explored a wide variety of alternatives to address our balance sheet and looming note maturities in a highly capital constrained market environment.”

Holly cited the uncertainty around the Saudi-Russian price war and the coronavirus pandemic in making its decision.

The company said its reorganization plan would deleverage its capital structure by over $2.2 billion by exchanging all of its notes for 97% of the new equity in a reorganized company. It said it expects to have sufficient liquidity to meet its financial obligations during the restructuring without the need for additional financing.

Whiting had $2.8 billion in debt and more than $585 million in cash on its balance sheet as of Dec. 31.

“We believe this financial demise was due to a combination of difficult macro conditions combined with sub-par operations for several quarters,” SunTrust Robinson Humphrey analyst Neal Dingmann said.

Shares of Whiting Petroleum were down 44%.