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A bankruptcy court in Texas has signed off on Whiting Petroleum’s bankruptcy plan, which exchanges billions in debts for equity in a reorganized company.

Under the plan approved by the Southern District of Texas Bankruptcy Court, Whiting will shed $2.4 billion of its debts, in a $3.4 billion bankruptcy reorganization that will leave 97 percent of its ownership in the hands of private equity firms and investors and 3 percent with existing stockholders.

Initially, Whiting was to raise $1 billion to pay part of its debt, but the final plan instead establishes a reserve-based revolving credit facility with an initial $750 million, according to the company’s SEC filing. The revolving fund’s credit limit is $1.5 billion.

The effective date of this plan will occur only after all conditions required by the plan have been met, which the company projects will be Sept. 1. Up until then, technical amendments are still possible.

A complete description of the plan is available online at https://whitingpetroleumcorp.gcs-web.com/node/17881/html.

Whiting will emerge from bankruptcy with both a new chief executive officer and a new board. Kevin McCarthy, vice chairman of private equity firm Kayne Anderson Capital Advisors, will serve as chairman of the new board.

Former SRC Energy CEO Lynn Peterson, meanwhile, has been tapped to serve as Whiting’s new CEO, replacing Brad Holly, who took the post in 2017 after serving as head of the Anadarko Petroleum Corporation.

Holly will receive a $2.53 million severance package, according to regulatory filings with the SEC, and 18 months of health care benefits. This is on top of the $6.4 million he received for steering the company through the bankruptcy process.

Peterson, meanwhile, is a 40-year veteran of the oil and gas industry. He was also at one time the top executive of Kodiak Oil, a major producer in the North Dakota Bakken, which Whiting bought for $3.8 billion in 2014.

That purchase, for a time, made the company the top producer in the Bakken, but it also dramatically increased its debts, leading analysts at the time to speculate about the company’s longevity.

Whiting made it through the 2015 downturn, but declared bankruptcy on April 1 of this year, following a series of cost-cutting moves that included laying off 33 percent of its workforce the previous year.

Whiting was among the first of the pandemic bankruptcies for the oil and gas sector, which has suffered under both a global pandemic that has crushed demand for fuel, and a production and price war that developed between Saudi Arabia and Russia, leading those countries to overproduce millions of barrels of oil.

At the time it declared bankruptcy, Whiting was looking at $190 million in bond payments due for April and had a $775 million bond maturity in December. A credit re-evaluation also loomed for the spring, leaving it with few options but to reorganize.

Whiting is an independent oil and gas company with holdings primarily in the Bakken and Three Forks plays in North Dakota. It also has some assets in the Niobrara play in northeast Colorado. It has 557,000 acres, 85 percent of which are in the Williston Basin.

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