(Reuters) – Oasis Petroleum Inc filed for Chapter 11 bankruptcy on Wednesday, the latest U.S. shale producer to seek court-assisted restructuring amid shock shock to the energy sector ‘an unprecedented collapse in oil prices due to the COVID-19 pandemic.
Shares of the company, which earlier this month ignored interest payments on some bonds, fell more than 24% before market launch.
Lockdowns caused by viruses, which have decimated demand for travel and fuel, have forced many shale producers to stop oil drilling, leaving them without a source of money to repay their massive debts. Oasis had long-term debt of $ 2.76 billion with only $ 77.4 million in cash and cash equivalents as of June 30.
The company said it plans to reduce debt by $ 1.8 billion through restructuring and has secured $ 450 million in debtor-in-charge financing.
U.S. oil prices have so far fallen nearly a third from over $ 60 a barrel at the start of the year and briefly turned negative in April.
In July and August, 13 North American oil producers filed for creditor protection, according to a report by law firm Haynes and Boone, reflecting crude oil prices below profitable levels for many companies.
Chesapeake Energy Corp and Chaparral Energy Inc filed for bankruptcy earlier this year, while Whiting Petroleum Corp completed its financial restructuring earlier this month.
“Due to global energy demand and historically low commodity prices, we determined it was best for Oasis Petroleum to take decisive action to strengthen our liquidity,” said Thomas Nusz, CEO of Oasis, in a statement.
The company said its upstream operations and production would continue as normal as the restructuring proceeds, and its independent pipeline company, Oasis Midstream Partners LP, was not included in the Chapter 11 proceedings.
Oasis has listed assets and liabilities between $ 1 billion and $ 10 billion, according to a court file.
Report by Rama Venkat and Shariq Khan in Bengaluru; Editing by Ramakrishnan M. and Shinjini Ganguli