Oasis appears headed for bankruptcy, while recently emerged Whiting implements more cuts

Bankruptcy, banks, Oasis

By: Renee Jean – Williston Herald – Whiting Petroleum is further cutting its costs after emerging from Chapter 11, while another Bakken energy player, Oasis Petroleum, looks like it is probably headed toward Chapter 11.

Oasis Petroleum said it has decided to defer the Sept. 15 interest payments on 6.875 percent senior unsecured notes due 2022 and 2.625 percent senior unsecured notes due in 2023 while it is discussing a “comprehensive restructuring to strengthen Oasis Petroleum’s balance sheet and financial position” with lenders and an ad hoc group of noteholders.

The company does have sufficient liquidity to continue operating in the “normal course,” the media release states.

The decision to defer the interest payments starts a 30-day “grace period,” after which the company must either pay the amount, or it will be formally in default.

Oasis Midstream Partners, an independent legal entity, is not part of the financial discussions and remains independently “well-capitalized,” the media release said.

Oasis stock closed Friday, Sept. 18, at 49 cents and was trending down 11 percent Monday afternoon. The stock was at 44 cents Monday afternoon.

Whiting, meanwhile, which emerged from bankruptcy Sept. 1, said it has further reduced its workforce another 16 percent, of which 90 percent were corporate positions. That will save the company $20 million, on an annualized basis.

Whiting also reduced the compensation of its remaining officers 15 to 20 percent, realigning bonus programs, and has initiated salary reductions across a broad group of employees.

The effect of these changes will not be realized until 2021, due to one-time charges in 2020, Whiting said in a media release.

Whiting also revised its guidance for the remainder of 2020. It now expects 88 to 92 million barrels of production, 60 percent of which is oil. Capital expenditures range between $34 to $39 million and lease operating expense ranges between $112 to $116 million.

“I’m pleased with what we have accomplished in bringing on a new board, new leadership and new vision for the Company post-emergence,” Chief Executive Officer of Whiting Lynn Peterson said. “The changes implemented are building a culture of capital discipline and demonstrating efficiencies and cost savings throughout the organization. We look forward to announcing preliminary 2021 guidance in conjunction with our third quarter 2020 results.”

That earnings call is scheduled for November.

Oasis and Whiting are among oil and gas companies that are struggling with high debts amid a demand-crushing pandemic and concurrent price war between Saudi Arabia and Russia that further depressed prices and has left the world awash in oil.

Prices after these twin blows to the energy sector are likely to be lower for longer, according to EIA projections, based on continued weak demand due to the coronavirus pandemic. The projections suggest the earliest hydraulic fracturing crews might return is the latter half of 2021.

Rigs will take even longer than that, though, and in fact, EIA doesn’t actually show them returning within their current forecast window — although other projections suggest they could return sometime in 2022.

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