U.S. Shale Driller Whiting Petroleum Files For Bankruptcy -- Update
April 01 2020 - 11:07AM
Dow Jones News
By Collin Eaton and Andrew Scurria
U.S. shale driller Whiting Petroleum Corp. filed for bankruptcy
protection on Wednesday, becoming the first sizable fracking
company to succumb to the crash in oil prices.
Whiting's bankruptcy filing comes as many U.S. oil drillers face
pressure to meet hefty debt obligations they ran up with banks and
bondholders to make America into the world's largest oil and gas
producer, as U.S. benchmark crude prices now fall to around $20 a
barrel.
Oil prices are coming off their largest monthly drop ever as the
coronavirus pandemic saps oil demand at the same time Saudi Arabia
presses a price war against Russia by flooding global markets with
crude.
Whiting sought chapter 11 protection in the U.S. Bankruptcy
Court in Houston, touting a proposed settlement with creditors to
eliminate $2.2 billion in debt in return for a 97% equity
stake.
The Denver-based company, one of the largest drillers in North
Dakota's Bakken shale, had come under financial pressure even
before U.S. crude prices dropped. By Tuesday, Whiting shares had
fallen to 67 cents.
Chief Executive Brad Holly said the company's proposed
restructuring was its "best path forward" given uncertainty about
how long the Saudi-Russia price war and the pandemic would go
on.
Whiting foreshadowed its bankruptcy by taking steps on Friday to
protect $3.4 billion in net operating losses, which are potentially
valuable tax assets that could be used to reduce future federal
taxes.
The company also drew down $650 million from a credit facility
last week to generate cash and won't make a $262 million debt
payment that comes due Wednesday.
The deterioration in oil prices has pushed many U.S. shale
companies to the brink of bankruptcy and doomed the hopes of others
to restructure their operations under chapter 11.
Sanchez Energy Corp. reached a proposed deal on Monday to hand
control to its bankruptcy lenders after the price collapse dashed
their chances of being repaid. EP Energy Corp. is looking for a
path out of chapter 11 following the collapse of an exit deal. Alta
Mesa Resources Inc. is scrambling to sell its shale assets out of
bankruptcy after a proposed sale fell through.
Write to Andrew Scurria at Andrew.Scurria@wsj.com
(END) Dow Jones Newswires
April 01, 2020 10:52 ET (14:52 GMT)
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