Oasis Petroleum Inc. shares OAS, -0.55% slid 26% in premarket trade Wednesday, after the company said it is filing for Chapter 11 bankruptcy with a prepackaged plan with creditors, aiming to reduce its debt by $1.8 billion.
The company is the latest energy company to collapse beneath the weight of a weak oil price and constrained demand during the coronavirus pandemic. “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,” the company said in a statement.
Oasis has secured a $450 million debtor-in-possession loan and has sufficient liquidity to maintain operations. The company expects to emerge from bankruptcy in November, subject to court approval, and expects to have about $340 million of borrowings under a credit facility.
Shares have fallen 87% in the year to date, while the S&P 500 SPX, -0.48% has gained 3.2%.