A U.S. shale company files for bankruptcy amid recent oil price fall

Whiting Petroleum California Resources Corporation based in Denver, Colorado filed for bankruptcy on Wednesday (local time). This is the first bankruptcy filed by a shale company since the oil price crashed due to the outbreak of COVID-19. If a series of energy companies file for bankruptcy as a result of low oil prices and dwindling demand, huge aftermath is expected, including large-scale unemployment.

An investment bank Morgan Stanley recently named Whiting Petroleum California Resources Corporation, Chesapeake Energy, Oasis Petroleum, and Range Resources as shale companies with a higher risk of bankruptcy due to recent oil price falls.

In fact, Occidental Petroleum’s Senior Vice President Oscar Brown resigned for the company’s financial struggle on the day of Morgan Stanley’s announcement. The company also reduced its employees’ salaries by 30 percent. Chesapeake Energy, California Resources Corporation, Gulfport Energy Corporation, and Callon Petroleum also hired restructuring experts. Their decisions seem to be based on the judgment that they cannot survive low oil prices with massive debt in place.

Energy companies’ crisis is directly related to the unemployment issue. According to the American Petroleum Institute, the energy sector accounts for 7.6 percent and 5.6 percent of the U.S.’s GDP and employment, respectively. The shale industry alone creates 4.5 million jobs. Given the seriousness of the current situation, U.S. President Donald Trump plans to discuss future measures with the CEOs of energy companies, including ExxonMobil, Chevron Corporation, Continental Resources, and Occidental Petroleum, on Friday at the White House.


Yong Park parky@donga.com