THE BANKRUPTCY OF “WHITING PETROLEUM” COMPANY: WHY DID IT HAPPEN?

As it was noted by the American media, almost all American companies, involved in oil production, have serious financial debts. It is interesting that on the day the company began the bankruptcy procedure, the prices of energy in the market went up by almost 10%.

Thus, “Whiting Petroleum” became the first bankrupt company among others, operating in the shale oil market. In official publication on its website, the company announced that it had been forced into bankruptcy by a serious decline in hydrocarbon prices, aggravated by a decline in demand due to the pandemic.

The fracking technology, used by the company for oil production, has been repeatedly condemned by environmentalists for the harm, caused to the environment.

Hydraulic fracturing, which is used in such cases, however, allowed North American companies to enter the European market and successfully deliver the oil to Poland and some other countries.

The company itself considers the upcoming bankruptcy only from the perspective of financial restructuring, which should take place in nearest future. $ 585 million on the balance of “Whiting Petroleum” will allow it to continue working without entering into conflict with the partners, suppliers or its own personnel.

The formal reason of bankruptcy is a debt of $ 262 million.

The deadline for its payment came on Wednesday. According to the analysts, the company has accumulated debts of $ 2.2 billion. However, after the bankruptcy information was announced, the shares fell by almost 45%. On Wednesday, they could be purchased at a price of 40 cents apiece.

The company was forced to turn to the American court by long-standing financial problems. Will the organization be able to pay its debt in the current circumstances by exchanging it for 97% of the shares, given their sharp depreciation? The experts suggest that the current bankruptcy has a landmark nature and could be the first of many in the industry.