Whiting Petroleum has filed for bankruptcy to complete a deal with major creditors it said will reduce its debts by $2.2 billion.
The shale oil producer said the Chapter 11 filing in Houston is part of a deal with the owners of three groups of debt securities, including notes coming due this year. Whiting said the deal will leave it with a “more sustainable capital structure.” The bond holders will receive 97% of the shares of the company, with shareholders receiving the other 3%.
The deal negotiated with shareholders was one of the alternatives considered by the company that said it was facing “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 decided it was the best available option, said Bradley J. Holly, Whiting’s chairman, president, and chief executive officer.
Last July, the company cut its workforce by a third, eliminating more than 250 positions to address its diminishing cash flows.