U.S. Shale Driller Whiting Petroleum Files For Bankruptcy -- Update

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 [e-mail]

(END) Dow Jones Newswires

April 01, 2020 10:52 ET (14:52 GMT)

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