Whiting Petroleum arranges $2.5 billion revolver, $1 billion term loan

By Angela McDaniels

Tacoma, Wash., Aug. 28 – Whiting Petroleum Corp. subsidiary Whiting Oil and Gas Corp. entered into an amended and restated credit agreement on Wednesday that will provide for an up to $2.5 billion revolving credit facility and an up to $1 billion term loan, in each case subject to an initial borrowing base of $4.5 billion.

The credit agreement will replace Whiting Oil and Gas’ existing credit agreement once Whiting Petroleum’s proposed acquisition of Kodiak Oil & Gas Corp. closes, according to an 8-K filing with the Securities and Exchange Commission.

Whiting Oil and Gas plans to use the credit facilities to provide working capital, to refinance some existing Kodiak debt, to pay fees and expenses in connection with the acquisition and for general corporate purposes.

The term loan will mature on Dec. 31, 2015.

The interest rate for the term loan will be Libor plus 200 basis points for the first 90 days and then Libor plus 250 bps.

Whiting Oil and Gas will pay a 25 bps commitment fee on the average daily unused amount of the term loan.

The revolver will mature on the fifth anniversary of the closing date of the acquisition.

For the revolver, the interest rate will be Libor plus 150 bps to 250 bps. The commitment fee will be either 37.5 bps to 50 bps. The exact margin over Libor and commitment fee will depend on the ratio of outstanding borrowings to the borrowing base.

Up to $100 million of the revolver will be available for letters of credit.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Wells Fargo Securities LLC are the joint lead arrangers. JPMorgan is the bookrunner.

JPMorgan Chase Bank, NA is the administrative agent. Bank of America, NA and Wells Fargo Bank, NA are the syndication agents. Compass Bank, U.S. Bank NA, Capital One, NA and SunTrust Bank are the documentation agents.

The credit agreement initially requires the company to maintain a ratio of total debt to EBITDAX of no more than 4 to 1 and a ratio of consolidated current assets to consolidated current liabilities of not less than 1 to 1.

The credit facilities will continue to be secured by a first lien on substantially all of Whiting Oil and Gas’ properties included in the borrowing base, and Whiting Petroleum will continue to guarantee the credit facilities.

At any time during which Whiting Petroleum has an investment-grade debt rating from Moody’s Investors Service or Standard & Poor’s and the company has elected to effect an investment-grade rating period, some security requirements, including the borrowing base requirement, and restrictive covenants will cease to apply, some other restrictive covenants will become less restrictive, an additional financial covenant will be imposed and the interest rate applicable to all revolving borrowings as well as the commitment fee for the revolver facility will be based on the company’s debt rating instead of the ratio of outstanding borrowings to the borrowing base.

Whiting and Kodiak are Denver-based oil and gas exploration and development companies.

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