Shale oil and gas producer Whiting Petroleum Corp. filed for Chapter 11 bankruptcy protection, striking an agreement with its note holders that grants them 97% of the reorganized company's equity.
The reorganization plan is intended to deleverage Whiting's capital structure by over $2.2 billion, according to an April 1 news release. Whiting is the first big shale producer to file for Chapter 11 protection since oil prices collapsed in March due to a price war between Russia and Saudi Arabia and falling demand because of the coronavirus spread.
Under the reorganization plan, Whiting will pay in full its revolving credit facility and other secured creditors, employees and tax and other priority claimants. Existing equity holders will also receive 3% of the reorganized company's new equity and warrants. The restructuring is expected to cut debt and result in a more sustainable capital structure, Whiting said.
The company entered into an agreement in principle related to restructuring with holders 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.
Whiting said it has over $585 million of cash on its balance sheet and is capable of operating its business as usual and meeting its financial obligations. The company filed with the U.S. Bankruptcy Court for the Southern District of Texas.
Moelis & Co. is the financial adviser, Kirkland & Ellis is the legal adviser, Alvarez & Marsal is the restructuring adviser and Jeffrey Stein of Stein Advisors LLC is the chief restructuring officer for Whiting. PJT Partners is the financial adviser and Paul Weiss Rifkind Wharton & Garrison LLP is the legal adviser for the consenting note holders.