April 1, 2020 [To be updated] – Whiting Petroleum Corporation and four affiliated Debtors (NYSE: WLL, “Whiting” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 20-32021. The Debtors, one of the largest independent exploration and production companies in the USA, are represented by Matthew D. Cavenaugh of Jackson Walker LLP. Further board-authorized engagements include (i) Kirkland & Ellis LLP as general bankruptcy counsel, (ii) Moelis & Company as financial advisors and investment banker, (iii) Alvarez & Marsal as restructuring advisors and (iv) Stretto as claims agent.
The Debtors’ lead petition notes between 25,000 and 50,000 creditors; estimated assets of $7.64bn and estimated liabilities of $3.61bn. Documents filed with the Court list the Debtors’ six largest unsecured creditors as (i) The Bank of New York Mellon Trust Company (as Trustee for $1.0bn 6.625% Senior Notes due 2026), (ii) The Bank of New York Mellon Trust Company (as Trustee for $774.0mn 5.75% Senior Notes due 2021), (iii) The Bank of New York Mellon Trust Company (as Trustee for $408.0mn 6.625% Senior Notes due 2023), (iv) The Bank of New York Mellon Trust Company (as Trustee for $262.0mn 1.25% Converible Senior Notes due 2020), (v) Schumberger Technology Corporation ($8.8mn trade debt) and (vi) Halliburton Energy Service Inc, ($8.7mn trade debt). The Debtors list 23 unsecured creditors with claims in excess of $1.0mn.
In a press release announcing the filing, the Debtors advised that: “The Company has more than $585 million of cash on its balance sheet and will continue to operate its business in the normal course without material disruption to its vendors, partners or employees. [This in no small part possible due to a $650.0mn drawdown of the Debtors $2.05bn credit facility disclosed in a March 27th 8-K which will undoubtedly have left some of those senior lenders extremely upset].
Whiting currently expects to have sufficient liquidity to meet its financial obligations during the restructuring without the need for additional financing.
The Company has also reached an agreement in principle with certain holders (the 'Supporting Noteholders') 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 (collectively, the 'Notes') regarding a term sheet (the 'Term Sheet') that contemplates a comprehensive restructuring. The proposed financial restructuring, the terms of which will be set forth in a forthcoming restructuring support agreement between the Company and the Supporting Noteholders, would significantly reduce the Company’s debt and establish a more sustainable capital structurepursuant to a consensual chapter 11 plan of reorganization (the 'Plan') that would be supported by the Supporting Noteholders on the terms of such restructuring support agreement."
Bradley J. Holly, the Debtors' Chairman, President and CEO, commented, “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 for the Company."
Plan Overview
The Debtors have filed a restructuring term sheet and lender cleansing materials with an April 1st 8-K.
The Plan will provide for, among other things:
- significant de-leveraging of the Company’s capital structure by over $2.2 billion through the exchange of all of the Notes for 97% of the new equity of the reorganized Company to be issued pursuant to the Plan;
- payment in full in cash and/or refinancing of the Company’s revolving credit facility;
- the payment in full in cash of all other secured creditors, tax and other priority claimants, and employees; and
- the Company’s existing equity holders receiving 3% of the new equity of the reorganized Company and warrants.
Significant Shareholders
- State Street Corporation – SSGA Funds Management, Inc.: 16.3%
- Black Rock, Inc.: 15.5%
- The Vanguard Group: 10.72%
- FMR LLC: 8.731%
- Dimensional Fund Advisor LP: 7.52%
- Hotchkis and Wiley Capital Management, LLC: 5.46%
About the Debtors
According to the Debtors: "Whiting Petroleum Corporation, headquartered in Denver, Colorado is one of the largest independent exploration and production companies in the USA with an oil focused asset base. We control one of the largest acreage positions in the Bakken/Three Forks resource play in the Williston Basin of North Dakota and Montana with 476,332 net acres in the oil productive sweet spots of the basin. From the Bakken and Three Forks resource play we have consistently been a top oil producer in North Dakota and across the Williston Basin. In the new and large oil prone sweet spot of the eastern DJ Basin of Colorado, we have 84,607 net acres.
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