By Sarfaraz A. Khan
The shares of Whiting Petroleum (NYSE:WLL), the biggest hydrocarbon producer from North Dakota's Bakken formation, tanked yesterday, dropping by 19.5% when the markets closed, after the company announced that it will issue equity and debt, thereby signaling that the company has failed to find a buyer. Whiting plans to issue 35 million shares at $30 a piece, $1 billion convertible bonds that haven't been priced yet and $750 million 6.25% senior notes due in 2023 as it follows in the footsteps of its peers Energy XXI (NASDAQ:EXXI), RSP Permian (NYSE:RSPP), Antero Resources (NYSE:AR), Encana Corp. (NYSE:ECA) and Noble Energy (NYSE:NBL) who have also raised equity and debt.
Last year, Denver-based Whiting purchased its debt-laden competitor Kodiak Oil & Gas at a time when WTI was still priced at over $95 a barrel. Consequently, Whiting's long term debt climbed from $2.65 billion at the end of 2013 to $5.63 billion at the end of 2014, but oil prices plunged by nearly 50% in this period. With a weaker balance sheet, un-hedged oil production, and the anticipated cash flow deficit, Whiting found itself in a difficult position. Earlier this month, WSJ reported that Whiting was actively "seeking a buyer" while Bloomberg said that the company has hired a bank to help with the process.