U.S. shale producer Whiting Petroleum Corporation, once one of the top producers in the Bakken, said on Wednesday that it had filed for bankruptcy protection, becoming the first major victim of the oil price war and the coronavirus pandemic that sent oil prices to $20.

Whiting Petroleum Corporation, whose largest projects are in the Bakken and Three Forks plays in North Dakota and the Niobrara play in northeast Colorado, said in a statement that it had started voluntary Chapter 11 cases under the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.

“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,” said Bradley J. Holly, the company’s chairman, president and CEO.

Whiting Petroleum has reached an agreement with certain noteholders to pursue financial restructuring to debt by more than US$2.2 billion via the exchange of all of the notes for 97 percent of the new equity of the reorganized company.

Whiting Petroleum will continue to operate without material disruption to vendors or employees, and at this point, it expects to have enough liquidity to meet its financial obligations during the restructuring without resorting to additional financing, it said.

Whiting Petroleum became the first sizable U.S. shale producer to seek bankruptcy protection and restructuring after the oil price collapse forced many U.S. drillers, including the supermajors Exxon and Chevron, to announce significant reductions in projected spending and drilling operations, as no one in the U.S. shale patch can profitably drill a new well at $20 WTI Crude.

Since the oil price crash last month, 22 U.S. independents have cut expenditure for 2020 by a total of US$20 billion, an average of 35 percent, and three have slashed capex by 50 percent or more, Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie, said on Tuesday.

“The size of cuts is close to those of 2015 and have come through faster. Yet companies today are far leaner than back then; and what we’ve seen so far may just be a taste of what’s to come. Diamondback and Occidental have already cut twice in two weeks, suggesting further, deeper cuts are coming for many US Independents,” Flowers noted.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com: