Whiting Petroleum files bankruptcy; noteholders agree to restructuring

By Caroline Salls

Pittsburgh, April 1 – Whiting Petroleum Corp. filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the Southern District of Texas after reaching an agreement in principle with holders of its 1.25% convertible senior notes due 2020, 5¾% senior notes due 2021, 6¼% senior notes due 2023 and 6 5/8% senior notes due 2026 on the terms of a comprehensive restructuring, according to a news release.

Whiting said it has more than $585 million of cash on its balance sheet and it expects to have sufficient liquidity to meet its financial obligations during the restructuring without needing additional financing.

The company said it will continue to operate its business in the normal course without disruption to its vendors, partners or employees.

The proposed financial restructuring, the terms of which will be set in a forthcoming restructuring support agreement, would significantly reduce Whiting’s debt and establish a more sustainable capital structure under a consensual Chapter 11 plan of reorganization, the release said.

Specifically, the plan will provide for a significant de-leveraging of the company’s capital structure by more than $2.2 billion through the exchange of all of the notes for 97% of the new equity of reorganized Whiting.

The company’s revolving credit facility will be paid in full in cash and/or refinanced.

Other secured creditors, tax and priority claimants and general unsecured creditors will be paid in full in cash.

Existing equity holders will receive 3% of the new equity in the reorganized company and warrants.

“In 2019, we took proactive steps to reduce our cost structure and improve our cash flow profile,” chairman, president and chief executive officer Bradley J. Holly said in the release.

“We continue to build on these actions in 2020. 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.

“Given the severe downturn in oil and gas prices driven by uncertainty around the duration of the Saudi/Russia oil price war and the Covid-19 pandemic, the company’s board of directors came to the conclusion that the principal terms of the financial restructuring negotiated with our creditors provides the best path forward.”

Whiting listed $7,636,721,000 in assets and $3,611,750,000 in debt as of Dec. 31.

The company’s largest unsecured creditors are the Bank of New York Mellon Trust Co. of Chicago, with a $1 billion 6 5/8% notes claim, a $774 million 5¾% notes claim, a $408 million 6¼% notes claim and a $262 million 1.25% convertible notes claim; Schlumberger Technology Corp. of Houston, with an $8.84 million trade payables claim; Halliburton Energy Services Inc. of Houston, with an $8.37 million trade payables claim; Polar Midstream of Atlanta, with a $3.66 million trade payables claim; Baker Hughes of Houston, with a $2.57 million trade payables claim; BNN Redtail, LLC of Lakewood, Colo., with a $2.34 million trade payables claim; and Targa Resources Partners LP of Houston, with a $2.34 million trade payables claim.

According to an 8-K filed with the Securities and Exchange Commission, director William N. Hahne resigned, effective March 31. In addition, the company determined on March 28 that the employment of chief strategy officer Timothy M. Sulser would end on March 31.

Moelis & Co. is acting as financial adviser for the company, Kirkland & Ellis is acting as legal adviser, Alvarez & Marsal is acting as restructuring adviser, and Jeffrey S. Stein of Stein Advisors LLC is the company’s chief restructuring officer.

Whiting is an energy company based in Denver. The Chapter 11 case number is 20-32021.

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