Oasis Petroleum files for Chapter 11

December 2020 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

December 2020 Issue

Due to historically low global energy demand and commodity prices, as well as the unprecedented impact of the coronavirus (COVID-19) pandemic, independent exploration and production company Oasis Petroleum has filed for Chapter 11 bankruptcy.

The filing is in order to implement a comprehensive restructuring support agreement (RSA), through which Oasis Petroleum, and certain of its affiliates, intends to reduce its total indebtedness by $1.8bn. Subject to court approval, the company has also received a commitment for $450m in debtor-in-possession (DIP) financing from its existing lenders.

The new financing, along with cash generated from the company’s ongoing operations, is expected to provide sufficient liquidity for Oasis Petroleum to continue operating in the ordinary course during the Chapter 11 process. Moreover, vendors and suppliers are expected to be paid in full, and the company intends to seek court approval to pay vendors for all goods and services provided on or after the Chapter 11 filing date.

Additionally, Oasis Petroleum has entered into a commitment letter for an exit revolving credit facility with borrowing capacity up to $575m. Upon emergence, the company expects to have approximately $340m of borrowings under the facility.

“Oasis Petroleum is a great company with high-quality assets and employees and a well-earned reputation for excellence in environmental stewardship, safety and governance,” said Thomas B. Nusz, chairman and chief executive of Oasis Petroleum. “However, we determined that it is best to take decisive action to strengthen our liquidity and overcome the headwinds now challenging both our company and industry.”

Oasis Midstream Partners, an independent legal entity operated as a master limited partnership, and all subsidiaries in which it owns an equity interest, are not included in Oasis Petroleum’s Chapter 11 proceedings. Oasis Petroleum’s upstream operations and production and Oasis Midstream Partners’ operations are expected to continue as normal, and the companies will continue to prioritise the safety of their employees and communities.

“We remain committed to the highest standards as it relates to environmental stewardship, safety and operational excellence,” continued Mr Nusz. “We expect to continue our operations as normal and intend to meet our obligations to vendors, and to continue making payments to royalty owners, working interest owners and surface owners on a go-forward basis. We appreciate the support of our financial stakeholders and look forward to quickly emerging from this process as an even stronger company.”

Founded in 2007, Oasis Petroleum is an independent exploration and production company focused on the acquisition and development of onshore, unconventional crude oil and natural gas resources in the US. It is the premier operator in both the Williston Basin and Delaware Basin.

Acting as financial advisers during the Chapter 11 process are Tudor, Pickering, Holt & Co. and Perella Weinberg Partners. Kirkland & Ellis LLP is acting as legal adviser and AlixPartners, LLP is acting as restructuring adviser.

It is expected that the restructuring process will be completed on an accelerated time frame, allowing the company to emerge from Chapter 11 in November 2020, subject to court approval.

Mr Nusz concluded: “We are confident that we are taking the right steps to position the business for long-term success. We thank our lenders and noteholders for their support, which reflects their confidence in our business and our team, and which will allow us to move quickly through the Chapter 11 process.”

Fraser Tennant