Benzinga | Sep 30, 2020 05:41AM EDT

Oasis Petroleum Filed for Chapter 11 Bankruptcy Protection

Oasis Petroleum Inc. (NASDAQ:OAS) announced that it has entered into a restructuring support agreement (the "RSA") with substantially all of its lenders in Oasis Petroleum's revolving credit facility and holders of 52% of the aggregate principal amount of the Company's bonds on a comprehensive "pre-prepackaged" restructuring plan (the "Plan") to strengthen the Company's balance sheet and significantly reduce its debt.

To implement the Plan, Oasis Petroleum and certain of its affiliates today filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the "Court"). Through this financial restructuring, Oasis Petroleum intends to reduce its total indebtedness by $1.8 billion, representing 100% of its senior unsecured notes and senior unsecured convertible notes. Upon emergence, the Company expects to have approximately $340 million of borrowings under the Oasis Petroleum credit facility. It is expected that the restructuring process will be completed on an accelerated timeframe allowing for an emergence in November 2020, subject to Court approval.

Oasis Midstream Partners (NASDAQ:OMP), 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.

In light of a volatile market environment that drove a severe downturn in oil and gas prices, as well as the unprecedented impact of the COVID-19 pandemic, Oasis Petroleum engaged with its lenders and an ad hoc committee of noteholders regarding restructuring alternatives to reduce debt, increase financial flexibility and position the business for long-term success. After a thorough review, Oasis Petroleum determined that implementing a restructuring plan through a controlled, court-supervised restructuring is the right path forward. Throughout the financial restructuring process, Oasis Petroleum's upstream operations and production and Oasis Midstream Partners' operations are expected to continue as normal, and the companies will continue to prioritize the safety of their employees and communities.

Chairman and Chief Executive Officer, Thomas B. Nusz commented, "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. However, due to historically low global energy demand and commodity prices, we determined that it is best for Oasis Petroleum to take decisive action to strengthen our liquidity and overcome the headwinds now challenging both our company and industry. 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 court-supervised process."

Mr. Nusz continued, "We remain committed to the highest standards as it relates to environmental stewardship, safety and operational excellence. 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."

The Company intends to file customary motions with the Court to support Oasis Petroleum's ongoing operations without interruption, including the payment of employee wages and benefits and paying royalty interest owners, working interest owners and surface owners, in the ordinary course. In addition, 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 in the ordinary course of business. Under terms of the "pre-packaged" plan, which is subject to Court approval, general unsecured pre-petition claims will also be paid in full upon the Company's emergence from Chapter 11.

Financing

In connection with the RSA, and subject to Court approval, Oasis Petroleum has received a commitment for $450 million in debtor-in-possession ("DIP") financing from its existing lenders.

Upon Court approval, the new financing, along with cash generated from the Company's ongoing operations, is expected to provide sufficient liquidity for the Company to continue operating in the ordinary course during the court-supervised process.

Additionally, the Company has entered into a commitment letter for an exit revolving credit facility with borrowing capacity up to $575 million.

Oasis Petroleum Inc. and Entities Included in the Chapter 11 Process

Only Oasis Petroleum Inc. and certain of its entities have filed for Chapter 11. The following entities are included in the Oasis Petroleum Chapter 11 filing:

Oasis Petroleum Inc.Oasis Petroleum LLCOasis Petroleum North America LLCOasis Well Services LLCOasis Petroleum Marketing LLCOasis Petroleum Permian LLCOMS Holdings LLCOasis Midstream Services LLC andOMP GP LLCThe following entities are NOT included in the Oasis Petroleum Chapter 11 filing:

Oasis Midstream Partners LP and subsidiaries, OMP Operating LLC, Bobcat DevCo LLC, Beartooth DevCo LLC, Bighorn DevCo LLC and Panther DevCo LLC