(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.”
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