Whiting Petroleum (WLL) Emerging From Bankruptcy

Whiting Petroleum Corp (WLL)

About the Company 

Whiting Petroleum Corp (WLL) is emerging from bankruptcy today. Whiting is an oil and gas company that does lots of shale production. Shale oil wells are more costly to drill and develop because they require fracking. The rate a well produces oil diminishes over time and shale wells diminish faster than others. Oil companies must be drilling and exploring or their production will diminish over time - especially shale oil companies like Whiting.

Debt and Leverage Metrics of Whiting Petroleum at 9/1/20
Face AmtPriceMkt ValueRestruct Value
TTM Period End6/30/20
Cash492Credit Agreement912100912912
1.25% Convertible Senior Notes 20201872547187
Peak EBITDAX24865.75% Senior Notes 202177424186774
TTM EBITDAX1086.25% Senior Notes 202340825102408
6.625% Senior Notes 20261000252501000
Total328114973281
Equity-1780.797273
LeverageAt FaceNet at Market
EBITDAX =108Thru Notes30.413.9
EBITDAX =800Thru Notes4.11.9
EBITDAX =2500Thru Notes1.30.6

Investment Opportunities

Unlike most bankruptcies, Whiting's restructuring plan gives some value to the stock holders. Whiting's stock, WLL, is today selling at 0.79/share. The plan gives value equivalent to 0.80/share. Today's stock holders shouldn't lose any value if they hold-on through the usually tumultuous time for securities right after bankruptcy.

Whiting's bonds are even better. After months in the 18-22 range, today they are selling at 25 and the plan gives them value equivalent to 100.

The kicker is that the restructuring plan based its valuations based on oil futures predicted prices on May 26, 2020 - when WTI oil was at $36.12. On that day the market was predicting an average price in 2021 of $38.03. Oil prices have been over $40 since June and today are at $43.

May I suggest backing up the truck and loading up on all the bonds you can afford? I already have.

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