Whiting Petroleum Files for Bankruptcy Amid Oil Price Crash

[Elderberry]

Zacks Equity Research 4/2/2020

Whiting Petroleum Corporation WLL 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.

More: https://finance.yahoo.com/news/whiting-petroleum-files-bankruptcy-amid-134201703.html

[IsailedawayfromFR]

Zacks Equity Research 4/2/2020

Whiting Petroleum Corporation WLL 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.

More: https://finance.yahoo.com/news/whiting-petroleum-files-bankruptcy-amid-134201703.html

I question why a company should be able to eliminate debt rather than pay back creditors.

The company assets are far higher than the debt it owes.

If I were a bondholder, I would object to the bankruptcy and ask that the company liquidate assets instead.