|Bid||0.3379 x 1400|
|Ask||0.3380 x 1300|
|Day's Range||0.3126 - 0.3800|
|52 Week Range||0.2500 - 30.9400|
|Beta (5Y Monthly)||3.70|
|PE Ratio (TTM)||N/A|
|Earnings Date||Apr. 28, 2020 - May 03, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||3.65|
Cowen Senior Analyst Gabriel Daoud joins On The Move to discuss the firm’s decision to downgrade multiple oil and gas companies following OPEC's failure to strike a deal on production cuts.
(Bloomberg) -- In Saudi Arabia, there is one oil company, the state-run behemoth Saudi Aramco. This makes for a fairly simple process to set policy goals when the country negotiates output quotas with rivals.In the U.S., there are more than 6,000 oil drillers -- everything from tiny wildcatters in the shale patches of Texas and North Dakota to global giants like Exxon Mobil Corp.That would seem to make formulating a coherent U.S. negotiating stance next to impossible. And yet, President Donald Trump appears to be intent on seeking to broker a dramatic cut in output along with Saudi Arabia and Russia to prop up plunging prices.The president’s triumphant tweet Thursday that Saudi Arabia and Russia are open to substantial production cuts quickly gave way to fears in some quarters that the U.S. and other non-OPEC producers would have to join them in slashing output to achieve the goal of giving severely depressed prices a boost.And Trump will likely face a bitterly divided oil industry when he meets with energy executives Friday to discuss the perilous state of world crude markets and the threat to U.S. shale fields.Oil soared as much as 35% after the presidential tweet, then pared gains after Saudi Arabia and Russia didn’t confirm they had agreed to any cuts. The Saudis called for an urgent meeting of the OPEC+ alliance -- which includes Russia -- to reach a “fair deal” that would restore balance in the markets, state-run Saudi Press Agency reported.To satisfy Saudi Arabia’s insistence that all share the burden, Trump would have to unify a fractious and discordant group of U.S. companies and states that haven’t faced output restrictions in nearly half a century. That includes some 6,000 shale drillers that, until very recently, were responsible for soaring U.S. production.Multinationals such as Exxon Mobil Corp. have typically opposed any kind of government intervention, from tariffs to mandated production cuts. With better access to capital and diversification of businesses, they’re more resilient than smaller operators to ride out the rout. Some independent explorers, whose tenacity and technological innovation began the shale-oil revolution, see today’s low crude prices killing the domestic industry and leaving the country dependent on foreign producers in the future.Those fears are not unfounded. Whiting Petroleum Corp., an independent producer in the Bakken in North Dakota, filed for bankruptcy this week. Underscoring the divide, Scott Sheffield, the outspoken chief executive officer of Pioneer Natural Resources Co., has argued that the majors want to dominate the issue so they can out-muscle smaller rivals in the country’s biggest shale basins, including the Bakken and the Permian, in Texas and New Mexico.Ryan Sitton, a Texas oil regulator who first proposed the idea of America joining with the Saudis and Russians to reduce output, said it’s “short-sighted” to knock back the idea right off the bat. “Let’s have a conversation and figure out how we bring these different groups together,” he said in an interview on Bloomberg TV.Sitton later tweeted that he had a “great conversation” with Russian Energy Minister Alexander Novak about cutting 10 million barrels a day of global oil supply and was looking forward to speaking with Saudi Energy Minister Prince Abdulaziz bin Salman.The prospect of capping U.S. production is a non-starter with many industry heavyweights. The American Petroleum Institute called pro-rationing an “anticompetitive” effort that would only harm U.S. consumers and producers. Exxon, America’s biggest oil company, is “not seeking any federal or state intervention measures in energy markets,” the company said, adding that free markets would resolve any imbalances.Oil industry lobbyists are warning the administration that a domestic quota-system or coordinated output decrease would send a signal to Saudi Arabia and Russia that they are winning the price war. The approach could hurt efficient, low-cost U.S. oil producers, they argue.Still, with oil trading near the lowest point in two decades, unusual times mean that usual rules may not apply.A U.S. production cut “would be difficult but it’s certainly not impossible in these exceptional circumstances,” said James Lucier, managing director of research firm Capital Alpha Partners LLC. “Given the fact that you have the major oil industry CEOs meeting at the White House tomorrow and other independent E&P companies visiting the White House over the weekend, something like this is definitely going to be on the table.”The issue is not simply big producers versus small ones. Some independent operators in Texas are in favor of output curbs because, in part, they’re running out of storage. Others, such as Trump confidante Harold Hamm, want the U.S. to sanction the Saudis with anti-dumping tariffs.Technical and legal challenges would abound. Industry representatives have warned the White House that any curbs on field production could amount to trespass on the property rights of landowners, oil companies and royalty owners. While Texas and Oklahoma can install output limits -- called pro-rationing -- other states don’t have these powers. The federal government has strong influence over the Gulf of Mexico, Alaska and parts of New Mexico, where it owns lots of land.Another option is to limit exports, which were banned for 40 years until 2015. Restricting those would likely be the most effective method of scaling back production, said Katie Bays, co-founder of Washington-based Sandhill Strategy LLC. That, coupled with letting producers use the Strategic Petroleum Reserve as storage, “would functionally seem to work for the next few months to take oil off the water.”Although Congress lifted the oil export ban in December 2015, the president still has broad authority to reimpose limits. Under federal law, the president can declare a national emergency and impose export licensing requirements for up to a year, with the potential for additional extensions.For shale oil producers in Texas, the largest oil-producing state, output cuts are coming irrespective of geopolitical concerns. They’ve already slashed spending budgets, employees and rigs. There’s such an overflow of oil that storage capacity is filling up fast. That could lead to producers being forced to shut in wells.“The question is not will markets come into balance, the question is will it be done in a strategic and thoughtful way, or done in a reactive way once all the storage fills up,” Sitton said.Read more: Why a Texas Oil Regulator Could Play the Role of OPEC: QuickTakeOne of the biggest hurdles may be the reputational damage done to an industry that prides itself on individualism and hostility toward regulation. Many fossil fuel companies have for decades criticized renewable energy for benefiting from government handouts. And, as the financial crisis shows, once government extends a bailout, the public uproar is long-lasting.“Americans have no sympathy for ‘oil billionaires’ and most of the country benefits from low energy prices,” said Mickey Raney, chief executive officer of Impact Energy Partners LLC, a small oil and gas producer in Oklahoma. “Our industry chose to accept the influx of Wall Street money that funded incompetent teams to drill wells that would never pay out. The management teams made millions in high salaries, stock options and cash bonuses for leading their companies into bankruptcy.”“Properly managed companies must now find ways to survive in the mess created by ourselves, not by Saudi Arabia or Russia,” Raney said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Denver-based Whiting Petroleum (WLL) files for bankruptcy as the global oil market has collapsed due to weakness in oil prices and slackness in demand.
(Bloomberg Opinion) -- There are a couple of ways of summarizing what’s happened with Occidental Petroleum Corp. since CEO Vicki Hollub went all-in on buying Anadarko Petroleum Corp. last year. One would be that the deal trashed Oxy’s relationship with shareholders and saddled it with too much debt, leading to chronic underperformance and, when disaster struck, a massive dividend cut. An alternative take might be:Ms. Hollub enhanced the value of Occidental’s portfolio of assets through the Anadarko acquisition, which strengthened Occidental’s long-term value proposition.That second one comes from Oxy’s preliminary proxy statement, filed this week.Here’s a quick sanity check by way of a chart. See which of the two assessments most closely aligns with this set of squiggles:One detects some uneasiness on Oxy’s part. It took the trouble to lay out “realizable” pay for executives in its proxy; the idea being that the actual value of stock-based awards plummeted with Oxy’s price. Hence, while Hollub’s headline total compensation for 2019 clocks in at almost $16 million, the company calculates its value as of March 24 was a mere $4.4 million. Salaries for 2020 have been slashed (although these typically account for only 10-15% of total compensation). Plus, the proxy discloses that Oscar Brown, the head of strategy who played a leading role in the Anadarko deal, is no longer with the company.Clearly, Hollub’s pay package isn’t worth what it was a couple of months ago. On the other hand, compared with a shareholder who just had most of their dividend taken away, the CEO is still being paid to wait. After all, the board presumably expects Hollub to preside over some sort of recovery in the share price (and, thereby, connected stock-based awards).Moreover, while realizable pay may now be worth a fraction of what it was when the board met in February, the more pertinent question is why was it worth so much in February? It was clear by then, even before the corona-crash, that Oxy’s gamble had inflicted big losses on shareholders and forced it to cut spending and growth targets. Total shareholder return in 2019 was negative 28% — worse than the sector, the market and the year before. Yet Hollub’s headline compensation rose by 13%.Then there are bonuses, typically adjusted to some percentage of a target level based on company performance. Oxy’s percentage for 2019: 175%. As is usual with these things, that number derives from a Rube Goldberg-esque set of performance metrics and weightings. In this case, it was complicated further by being split between pre- and post-acquisition objectives.Astoundingly, the executives were deemed to have exceeded expectations even more on the latter bit. Defined in exceedingly narrow terms, I suppose one could have argued back in February that, judged on things like realizing synergies or whatnot, the executives were hitting their marks. But context is everything, and the context here is a debacle. So perhaps stuff like realizing synergies should have been redefined as the bare minimum rather than bonus-worthy. Again, one detects a certain uneasy recognition of the dissonance here with the majority of Hollub’s bonus being paid in restricted stock units rather than cash.Oxy isn’t alone in setting executive compensation at odds with investors’ experience (see this). The same day it filed its proxy, Whiting Petroleum Corp. filed for chapter 11. While this Bakken-basin fracker cited Covid-19 and the Saudi-Russian oil price war, it already had an underlying (and familiar) condition of rising leverage and weak or negative free cash flow. Announcing its bankruptcy, the company also disclosed bonuses for its top executives, approved just days before, worth $14.6 million. That is actually two-thirds higher than Whiting’s cash balance at the end of December.Doug Terreson, an analyst at Evercore ISI who has been beating the drum on this misalignment for years, calculates that 15 CEOs of the integrated oil and exploration and production companies he covers were paid more than $2 billion in aggregate over the past decade. In exchange, shareholders netted a total return of zero, while the S&P 500 generated a positive total return of more than 250%. “This pay for performance disconnect has not gone unnoticed by the buy-side and is part of the reason why investors avoid energy stocks. The deck is stacked against them,” he writes.Still, the sheer drama of Oxy’s past year marks it out. Consider that the same filing lauding Oxy’s “enhanced” value after swallowing Anadarko also details the company’s recent agreement with one Carl Icahn under the award-worthy euphemism of “Board Refreshment.” The dissonance is deafening.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Oil markets are in pain. Demand has plummeted, with about three billion people under lockdown just as the world faces a historic supply glut. The world’s crude storage, meanwhile, is filling fast, from underground caverns to rail cars and tankers. For landlocked producers, that hardly matters: Some are already paying customers to take their oil away.The consequences will be long-lasting. Drillers in the U.S. and elsewhere are scaling back or shutting down production. Against a background of steep spending cuts, not all of that will be swiftly reversible. Price relief will hinge on the world’s convalescence.The collapse in appetite for gasoline, jet fuel and diesel has been unprecedented in speed and scale. Goldman Sachs Group Inc. estimated Monday that with economies representing 92% of global gross domestic product now under some form of social distancing, the loss of demand this week stands at 26 million barrels per day, roughly a quarter below last year’s levels. Over a month, that’s almost 800 million barrels lost. Numbers since published from the shuttered economies of Italy and Spain suggest levels of destruction could be even worse. Spanish diesel demand is down 61%. The collapse is translating into a surplus that’s straining refineries, pipelines and the world’s limited ability to squirrel away oil.There is no precise estimate for how much capacity the world has to store oil products. Analysts at S&P Global Platts estimate 1.4 billion barrels, including 400 million of floating storage. So far, 50% of that has been used: The figure will rise to 90% by the end of April. It’s a squeeze visible in freight rates, with fleets of very large carriers filling up, making it harder to use them to store oil or even move it to a buyer. Costs for the benchmark journey from the Middle East to China have risen sevenfold; Reliance Industries Ltd. paid $400,000 a day for a supertanker to haul oil from the Middle East to India’s west coast in early April.For landlocked drillers, though, there are greater worries. They are facing a lack of local storage, and pipeline companies asking them to cut back or prove they have a buyer for their crude before loading. They simply can’t get oil to the right place, at the current price. Meanwhile, refineries are cutting back as they reach storage limits.This all means that negative oil prices — when producers are effectively paying customers to take the oil — aren’t only possible, but already a reality. The global benchmarks for oil, West Texas Intermediate and Brent, have dropped about two-thirds this year. They aren’t about to dip below zero. You won’t get paid for filling up at the pump. In the neighborhood of $20 a barrel, though, where your oil is now matters almost more than how much it costs you to produce it.Check out grades that demand expensive refining or in locations requiring costly transport. Wyoming Asphalt Sour, used in paving, was among the first to slide into the red at a negative $0.19 per barrel in mid-March, as my colleagues Javier Blas and Sheela Tobben reported last month. Other producers may be selling at a loss, effectively subsidizing buyers to take their output. Western Canadian Select, the benchmark price for the giant oil-sands industry in Canada, is at around $5, with Bakken crude in Guernsey, Wyoming, in single digits too. The gap with WTI has become wider.Many of these producers are already cutting back, or shutting down. Whiting Petroleum Corp., a shale champion, filed for bankruptcy Wednesday. Oil explorers, servicing companies and others are in severe pain too, and the squeeze won’t be felt only in the U.S. Russia says it won’t boost supply at current prices. Ecuador has failed to find buyers.What does this mean for an eventual recovery? First, the extent of demand loss means that even a resolution to the Saudi-Russian spat would help only a little, perhaps easing pressure on the world’s fleet of very large oil carriers, known as VLCCs.A real pick-up in prices will require demand to come back. At that point, it may not require much to prompt a temporary spike, depending on how much is stored, locked up by traders through financial contracts, or taken out for good. Geopolitics, with oil-producing nations strained, may also help a little. For the time being, though, negative prices are here to stay.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Whiting Petroleum Corp.’s board approved $14.6 million in cash bonuses for top executives days before the shale oil producer filed for bankruptcy.Chief Executive Officer Brad Holly will collect $6.4 million of the total, which will be “paid immediately,” the company said in a filing Wednesday. Four other executives including Chief Financial Officer Correne Loeffler will get the rest.The board signed off on the payouts March 26 as part of an overhaul of the company’s variable compensation program. The coronavirus pandemic, coupled with a price war between Russia and Saudi Arabia, has dealt a crushing blow to the oil and gas industry, making it “virtually impossible” to set short-term performance goals, according to the filing.Instead, the board said employees eligible for variable compensation can receive payouts that amount to no more than their target levels. The payouts will be made quarterly. As part of the deal, the senior executives agreed to forfeit equity awards they were in line to receive this year.The new program “is intended to ensure the stability and continuity of the company’s workforce and eliminate any potential misalignment of interests that would likely arise if existing performance metrics were retained,” the company said in the filing.Holly, who was executive vice president at Anadarko Petroleum Corp. before he was named Whiting CEO in 2017, has collected $4 million in salary and bonuses since then. He’s also received payouts of stock that have plunged in value.Loeffler, who joined the company just eight months ago, will receive $2.2 million from the bonus plan.Whiting, one of the biggest producers in North Dakota’s Bakken formation, filed for Chapter 11 Wednesday after the plunge in oil prices left it unable to pay its debts, which had been a challenge even before the latest downturn. It fired a third of its workers in July.(Updates with Holly’s compensation details in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The unprecedented collapse in global oil markets is wreaking havoc in all corners of the North American crude industry, pushing shale drillers, deepwater-equipment haulers and oil-sand miners to desperate measures.In the space of less than an hour on Wednesday, a former high-flying shale operator and an offshore transport company filed for bankruptcy. A short time later, a Texas shale driller was reported to be in talks with restructuring advisers, while a Canadian crude producer warned it may shut an oil-sands mine.The depredation is evident from the Rocky Mountains to the deep seas off Rio de Janeiro as debt-laden companies struggle to survive on ever-shrinking streams of cash. Even before the Covid-19 outbreak crushed energy demand and global stockpiles swelled, many operators were already fatally flawed entities teetering on the brink.The latest casualty is Whiting Petroleum Corp., a champion of what was once the premier U.S. shale field. The company filed for bankruptcy on Wednesday. Saddled with $3.6 billion in debt, Whiting is the most illustrious of the shale explorers thus far humbled by the worst oil rout in history.American crude has surrendered two-thirds of its value this year and just closed out its worst-ever quarterly performance. As many as 70% of the nation’s 6,000 oil explorers eventually may go under, according to Mizuho Securites USA LLC analyst Paul Sankey, as the twin blows of Covid-19 and a Russia-Saudi price war destroy producers like Whiting.Far from the shale fields of the U.S. Great Plains and Southwest, one of the world’s pre-eminent haulers of deepwater drilling gear, Hornbeck Offshore Services Inc., said it’s negotiating a plan with creditors to ease a $1.2 billion debt burden. The company is planning a Chapter 11 filing.Formed by entrepreneur Todd Hornbeck in 1997, at the dawn of the ultra-deepwater drilling era, the Louisiana-based company sought to build the biggest fleet of heavy-duty vessels in the industry. Hornbeck transported equipment and supplies for explorers in Brazil, Mexico, the U.S. Gulf of Mexico and elsewhere. But when the shale revolution spurred drillers to go back ashore a decade ago, offshore business dwindled.In Canada’s oil-sands region, Teck Resources Ltd. signaled it may shut down production at the Fort Hills mine just two years after operations commenced. Crude prices in Western Canada have been particularly hard hit by the downturn because the region’s remoteness and dearth of extra pipeline capacity limit market access.Back in the shale patch, Houston-based Callon Petroleum Co. was said to have hired advisers to discuss restructuring more than $3 billion in debt, Reuters reported without identifying its sources or the advisory firms.‘Comeback Kids’Although Whiting was once the largest oil producer in North Dakota’s Bakken shale region, it lost money in four of the last five years and spiraled deeper into debt just as Covid-19 metastasized. The company’s Bakken primacy won it little praise because the region was already falling out of favor as drillers shifted to lower-cost prospects in the Permian Basin.Touted as one of the “comeback kids” of U.S. shale by Canaccord Genuity in late 2015, Whiting said Wednesday that it’s agreed to hand most of its ownership to noteholders in exchange for erasing more than $2.2 billion in debt, according to a statement.On Wednesday, Denver-based Whiting faced the maturity of $262 million in convertible-notes. The company filed for Chapter 11 protection from creditors in the Southern District of Texas, listing debt of $3.6 billion and assets worth $7.6 billion in its bankruptcy petition.Even before the viral pandemic sent crude prices tumbling to the lowest in almost two decades, Whiting was struggling and never fully recovered from the last market crash of 2014-2016.$20 OilWhen former Anadarko Petroleum Corp. executive Brad Holly took the reins as Whiting’s chief in late 2017, oil prices were rising and at one point breached $75 a barrel. But the debt load remained stubbornly high, prompting Holly last year to fire one-third of his workforce and scale back production targets after posting an unexpected quarterly loss.Oil now trades around $20 a barrel, well below the $50 level that Cowen Inc. analyst David Deckelbaum estimates Whiting requires to stay afloat. The company, which had a market capitalization of $11 billion in 2014, was valued at about $62 million as of Tuesday. Whiting’s bankruptcy filing followed that of shale drillers Alta Mesa Resources Inc. and Sanchez Energy Corp., which sought protection last year.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Oil touched session highs then sold off abruptly in the final half hour before settlement on Wednesday after news that President Trump is set to meet with top executives at the nation’s largest oil companies to discuss measures to help the industry.The meeting, set for Friday, comes after a flurry of U.S.-driven diplomacy, with Trump speaking with both Russia and Saudi leaders to broker a deal, though the former OPEC+ allies have no plans to speak to each other, the Kremlin said.The move underscores just how much oil producers are reeling from the price rout that cratered the market and pushed West Texas Intermediate crude to post its worst quarter on record. On Wednesday, Whiting Petroleum Corp., facing more than a quarter-billion dollar debt it could not pay, filed for bankruptcy as the market collapse struck down another shale explorer. In some areas, producers are said to be receiving even negative prices for their oil.Even before news of the meeting, speculation that the Trump administration was taking steps to take American oil off circulation and into storage helped U.S. futures outperform global benchmark Brent crude. The premium of London-traded Brent over U.S. West Texas Intermediate narrowed to settle at $1 a barrel, the smallest since November 2016, making U.S. oil not competitive in foreign markets. Time spreads -- the gap between two calendar months that signals supply and demand balance -- rallied along the WTI futures forward curve and into settlement as well.However, such moves would likely only buy some time instead of solving the issue at hand: too much oil in global markets.“Being able to put oil into the strategic petroleum reserves would go a long way for the market,” said Phil Flynn, senior market analyst at Price Futures Group Inc. “We’re not out of the woods yet here for a major drop in price.”Traders largely shrugged off the biggest American crude stockpile increase since 2016 -- inventories jumped 13.8 million barrels last week. Supplies at the nation’s biggest storage hub at Cushing, Oklahoma, also piled up, according to the Energy Information Administration. Gasoline demand also plummeted to its all-time low.Still, the increase will likely reinforce what many believe is inevitable in coming weeks and months: that physical tanks, ships and caverns around the world will fill to the brim with supply as the spread of the coronavirus shuts down economies. Two of the world’s largest oil producing nations duking it out in a price war also doesn’t help.Saudi Arabia boosted output by 290,000 barrels a day in March to a one-year high of about 10 million a day and state-run producer Saudi Aramco is now supplying record volumes of more than 12 million barrels a day. The company has been loading 15 tankers with 18.8 million barrels of oil, it said Wednesday in a tweet.Yet, Russia doesn’t plan to increase output because it’s not profitable to do so, according to a government official familiar with the country’s plans.“With demand destruction across the globe and now with Saudi flooding the markets with oil, we feel it is only a matter of time before oil is trading in the teens and perhaps the low teens,” said Tariq Zahir, a fund manager at Tyche Capital Advisors LLC.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The key S&P 500 index was down more than 4% on Wednesday after a dire warning on the U.S. death toll from the coronavirus and heightened nerves over the upcoming earnings reporting season sent investors running from even the most defensive equities. The blue-chip Dow Jones Industrial Average and benchmark S&P 500 indexes were set to extend losses after suffering their worst first quarter as President Donald Trump warned Americans of a "painful" two weeks ahead and health officials highlighted research predictions of an enormous jump in virus-related deaths.
(Bloomberg) -- This year’s dramatic crash in oil prices will probably be blamed by many energy companies for their ultimate demise. But the first wave of U.S. shale producers to file for bankruptcy probably would have had to seek protection anyway.Whiting Petroleum Corp., facing more than a quarter-billion dollar debt maturity, filed for Chapter 11 on Wednesday. The double-whammy of Covid-19’s unprecedented hit to oil demand and a wave of supply unleashed as OPEC failed to reach a deal to curb output last month exacerbated pressures the North Dakota-focused producer was already feeling.“Most all of the companies that will file in the coming weeks would have filed eventually,” said Kraig Grahmann, a partner with law firm Haynes & Boone LLP. “The outlook for highly leveraged E&P companies wasn’t that rosy even before these dramatic world events.”Whiting lost money in four of the last five years and was spiraling deeper into debt even before oil prices plunged to the lowest levels in almost two decades. Debt-laden producers have struggled to recover from the 2014-2016 crash in crude prices.A spokesman for Whiting did not immediately return phone and email messages seeking comment.“The sudden and severe price drop that will be sustained for at least the near term made the need to file now clearer,” Grahmann said. “These events just accelerated the filings.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Dow Jones Industrial Average fell more than 900 points on Wednesday as a plunge in new orders for U.S.-made goods and a dire warning on U.S. death toll from the coronavirus pushed investors away from stocks to safer assets. The blue-chip Dow and the S&P 500 were set to extend losses after suffering their worst first quarter as U.S. President Donald Trump warned Americans of a "painful" two weeks ahead, with health officials modeling an enormous jump in virus-related deaths. The financials sector was among the biggest drags on the S&P 500.
The Dow Jones fell 600 points on Wednesday as investors fled to safe-haven assets after new orders for U.S.-made goods plunged to an 11-year low and the White House issued a dire warning on the U.S. death toll from the coronavirus pandemic. The blue-chip Dow and the S&P 500 were set to extend losses entering into the second quarter, as efforts to contain the outbreak resulted in deserted shopping streets, massive staff furloughs and a halt in business activity. Companies on the benchmark index have lost about $6.3 trillion in market value so far this year, even as major governments and central banks have announced trillions of dollars in measures to thwart a global recession.
U.S. shale giant Whiting Petroleum has announced that it has filed for bankruptcy protection as the oil price war continues to weigh on domestic drillers
Whiting Petroleum Corporation Reaches Agreement in Principle with Certain of its Noteholders to Pursue Consensual Financial Restructuring
Whiting Petroleum Corporation Adopts Shareholder Rights Plan to Protect the Availability of its Net Operating Losses
Given the oil price freefall, Whiting Petroleum (WLL) instantly lowers its development activity and plans to keep a low profile until a sharp recovery is achieved in commodity price.
Whiting Petroleum Corporation Prioritizes Cash Flow and Announces $185 Million Reduction to 2020 Capital Budget
(Bloomberg) -- Tumbling oil prices around the world are shining a light on the U.S. shale producers that are most at risk because of heavy debt loads.“I wouldn’t be surprised to see 55 to 60 bankruptcies” this year, compared with 50 last year, said Raoul Nowitz, managing director of restructuring and distressed asset support services at SOLIC Capital. That number may grow if the price slump persists for an extended period, he said.Chesapeake Energy Corp.Once a titan in shale, Chesapeake was spiraling downward even long before Monday’s market rout after it and rival drillers flooded North America with excess gas. Chief Executive Officer Doug Lawler recently told investors the survival strategy for his company includes selling assets, even though the acquisition market already is glutted with gas holdings.Read More: Oil-Price Collapse Seen Battering U.S. Investment, EmploymentChesapeake’s push to transition into an oil producer could prove pointless now that oil has dropped more than gas year to date. The company bought time in December by swapping some debt but it still has $192 million of bonds coming due in August, out of a total debt load of more than $9 billion.Unit Corp.Heightened refinancing and liquidity risks led Fitch Ratings to downgrade Unit Corp. in January because of the Tulsa, Oklahoma-based explorer’s “prolonged operational deterioration” since a bond exchange announcement that same month.The company, which generates most of its output from gas, announced last month that CEO Larry Pinkston will retire at the end of March and will be replaced by Chief Operating Officer David Merrill.Ultra PetroleumThe Colorado driller disclosed last week that it held talks with holders of its long-term debt in an effort to reduce leverage. That came after Ultra Petroleum Corp. said in November it had hired the Houston boutique energy bank Tudor, Pickering, Holt & Co. to evaluate strategic alternatives that would include the possibility of a corporate sale, merger or other transactions.Ultra filed for bankruptcy in 2016 and emerged the following year, just as the shale patch was beginning to crawl out of what was then the worst crash in a generation. The company’s bank recently cut Ultra’s credit line and borrowing base. Ultra shares have fallen 85% in the past year and traded for 8.5 cents on Monday.California Resources Corp.While California Resources announced last month an exchange offer for some of its bonds that could reduce total debt by $1 billion and extend the maturity of another $700 million by six years, the collapse in oil prices may make lenders balk at extending more credit to the state’s largest oil producer.The company may require Brent futures, the global crude benchmark, to be higher than $65 to generate free cash flow while maintaining output, Spencer Cutter and Leon Huang, analysts at Bloomberg Intelligence, wrote last month in a report.Whiting PetroleumAn oil explorer focused on the Bakken Shale in North Dakota, Whiting Petroleum Corp. has faced headwinds as low crude prices squeeze profits. The company announced last year that it would fire one-third of its workforce and scale back production targets after posting a surprise quarterly loss.Whiting has about $1 billion of debt coming due over the next year, including about $260 million of convertible notes that mature in April. It’s working with advisers to come up with strategic options, but investors have their doubts: its notes due March 2021 are trading around 18 cents on the dollar with a yield of 286%, which suggests they will never be repaid. Shares have lost 89% of their value so far this year.To contact the reporters on this story: David Wethe in Houston at email@example.com;Allison McNeely in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Joe Carroll, Christine BuurmaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- It’s often said that inflation is the bogeyman for bond traders. Indeed, accelerating price growth diminishes the value of each fixed interest payment over the years. Investors would be better off buying assets that increase along with prices, like real estate or equities, in theory.This week, bond traders are learning that the prospect of deflation can be just as painful.The benchmark 10-year U.S. Treasury yield tumbled by as much as 45 basis points on Monday to as low as 0.3137%. That’s more than 100 basis points below the record level of 1.318% that stood as recently as last month. Sure, anyone who owned U.S. Treasuries heading into 2020 has benefited from the incredible rally. But it leaves future investors with a grim reality of rock-bottom returns, putting the U.S. closer than ever to the likes of Germany and Japan. Last week, investors flocked to Treasuries purely as a way to protect against a swift slowdown in global economic growth because of the coronavirus outbreak. This week it’s something more. The price of oil crashed more than 30% after Saudi Arabia declared a price war and the OPEC+ alliance shattered. So too did break-even rates, which are the bond market’s measure of inflation expectations. The 10-year rate collapsed more than 30 basis points, the steepest decline since November 20, 2008, to about 1 percentage point, the lowest since March 2009. The five-year rate is 0.8 percentage point and the two-year rate is less than 0.5 percentage point.That’s bad news for the Federal Reserve, which is desperate to get inflation consistently at or above its 2% target after years of failing to do so. While oil prices are historically volatile, a shock of this magnitude can’t be dismissed by simply focusing on the “core” measures that exclude energy and food prices. It will reverberate through Main Street and Wall Street alike.The sharp drop in oil prices is even worse news for credit markets. The Markit CDX North America High Yield Index, which tracks the cost of insuring against defaults, surged on Monday by 145 basis points, the largest increase ever in data going back to 2012. It’s within striking distance of the highest level on record. The investment-grade fear gauge jumped by the most since Lehman Brothers crumbled.More specifically, significantly lower oil prices have immediate consequences for speculative-grade energy companies. At the end of last week, their yield spread widened to 1,080 basis points, up from just 612 basis points in January. It’s only going to get worse, and the spread could soon reach a record high, judging by recent trading. A Chesapeake Energy Corp. bond maturing in 2025 with an 11.5% coupon came into 2020 at a price just below 100 cents on the dollar. The same security, with a composite credit rating of triple-C, traded at 27 cents on the dollar on Monday.Investors are even losing confidence that some companies will survive the next year or two. Antero Resources Corp. debt due in November 2021 plunged 37 cents on Monday to 46.5 cents, while Whiting Petroleum Corp. securities maturing in March 2021 fell 25 cents to a mere 20 cents. There will be bankruptcies and defaults, full stop. The most scary prospect for bond traders is that this deflationary spiral ensnares other parts of the credit markets that are leveraged to the brim. It’s no secret, for instance, that the universe of triple-B rated corporate bonds has expanded to more than $3 trillion from $800 billion at the end of the last recession. Borrowing costs have remained historically low in the post-crisis era, creating the incentive for blue-chip companies and risky upstarts alike to finance themselves through debt. Carrying a vulnerable balance sheet can work when inflation is low but steady along with economic growth and when the credit markets are wide open for business. It’s an open question whether any of those assumptions still hold.Bond traders expect the Fed will do what it can, up to and including cutting its key short-term rate all the way back to the lower bound of 0% to 0.25% in short order. Such a move, in theory, would spur inflation. I’m skeptical, judging by the years of stagnant price growth in Europe and Japan. So too, apparently, are the European Central Bank and the Bank of Japan. There’s a reason that neither one is in a rush to drop interest rates further into negative territory. As Lacy Hunt of Hoisington Investment Management told me last week, “when the short rates start coming down toward zero, even before they get to zero, you reach a reversal point and the counterproductive effects of the lower rates offset the beneficial effects of having a lower cost of borrowing.” Banks are one such industry feeling the pinch. They struggled enough with short-term rates near the zero bound and longer-term yields around 2%. How are they supposed to earn net interest income now, with the 10-year yield at 0.5%? Investors aren’t waiting to find out: The KBW Bank Index plunged about 10% on Monday.With the coronavirus outbreak, there was always the feeling that maybe it wouldn’t be as bad as the worst-case scenario. The plunge in oil prices appears to have more staying power. Whether that one-two punch brings about outright deflation remains to be seen. But it’s looking more likely than any point in the past decade, which is an ominous sign for bond markets of all stripes. Flocking to the haven of Treasuries provides almost no income. The reach-for-yield trade is quickly unraveling in the riskiest debt. One of the cornerstones of the longest expansion in U.S. history — a benign corporate default rate — no longer looks so sturdy.The bond markets have cracked. Any further move toward deflation would most likely create a chasm.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Whiting Petroleum's (WLL) discretionary cash flow of $188.7 million surpasses its capex worth $103 million, accounting for a positive free cash flow of $86 million.