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Whiting Empties Credit Facility; Bonds in the Trash

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   |    Monday,March 30,2020

Whiting Petroleum Inc. has drawn down the remaining $650 million on its credit facility. 

Then the company released the following statement: "The additional funding provides the Company with more than enough liquidity to continue its daily business and satisfy obligations to its employees and vendors with minimal interruption as it considers all alternatives to maximize the value of the Company."

However, the real reason for the draw down might be what the company president and CEO stated: "The Company is focused on its upcoming note maturities and is aware that certain of its noteholders have engaged legal and financial advisors in light of these maturities. The Company is engaging collaboratively with its noteholders and other stakeholders as it explores all options to improve its capital structure."

According to the table below, the company has $262 million that is coming due this year and $774 million next year.

The only reasonable conclusion one can draw is that the company will seek to use the funds to pay down its debt that is coming due.  But if the company were to see its borrow base cut in the next two months, they would be required to repay (not sure over what time frame) the outstanding amount between the base cut.

 

Source : Whiting Petroleum November 2019 Investor Presentation



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