As part of its organizational restructuring, Whiting Petroleum Corporation WLL recently informed that it slashed workforce by 16% that comprised more than 90% corporate positions.
Further, the company is set to trim its executives’ income by 15-20% and commence salary reductions across a broad group of personnel. These cost-containment strategies will help Whiting Petroleum generate annual cost savings of approximately $20 million.
Apart from the cost-cutting measures, this energy player provided a revised guidance for the second half of 2020. Whiting Petroleum anticipates its production in the 88,000-92,000 barrels of oil equivalent per day range (60% oil) for the last six months of this year. Meanwhile, capital expenditure for the same is estimated between $34 million and $39 million. Its lease operating expense is projected in the $112-$116 million band.
Earlier this month, Whiting Petroleum recovered from bankruptcy and its ownership was made available to the public on the New York Stock Exchange starting Sep 2.
The company also completed its financial streamlining, thereby minimizing its funded debt by about $3 billion. This U.S. shale producer’s capital rearrangement comprises a new $750-million reserve-based revolving credit facility with maturity date in April 2024. Whiting Petroleum’s existing shareholders will receive one share of the company's reorganized new common stock for approximately every 75 shares previously owned.
The Bankruptcy and Financial Rejig
Whiting Petroleum filed for chapter 11 bankruptcy on Apr 1, 2020 and finally overcame the crisis through a strenuous restructuring process on Sep 1.
The firm struggled with fund crunch due to the global oil market collapse amid slackened world energy demand and weakness in oil prices triggered by the coronavirus pandemic and the Russia-Saudi Arabia price war. The company was the first publicly traded shale producer to file for bankruptcy after the historic crash in crude prices during March.
In late April 2020, Whiting Petroleum entered into a restructuring support agreement with creditors 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.
Per the plan, Whiting Petroleum exchanged 97% of the new equity of the realigned company for eliminating more than $2.3 billion of its debt, refinancing its revolving credit facility and paying up all its other secured lenders and employees. This apart, 3% of the new equity of the reorganized company and warrants will be added to its existing stockholder value.
The reorganization program was implemented to bail Whiting compete out of the current challenging environment by addressing its balance sheet issues, capitalizing on the cost structure and generating sufficient liquidity in a highly capital-constrained market.
Moelis & Company MC, Kirkland & Ellis LLP, Jackson Walker, and Alvarez & Marsal were Whiting Petroleum’s financial, legal and restructuring advisors.
About the Company
Founded in 1980, Denver, CO-based Whiting Petroleum is an independent energy company engaged in exploration, development and production of crude oil and natural gas properties in the United States. With the majority of its output coming from the Bakken play, the company holds one of the largest acreage positions in the region. It currently carries a Zacks Rank #3 (Hold).
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