By Devika Krishna Kumar
NEW YORK (Reuters) – Oasis Petroleum (NASDAQ:) Inc has begun to wind down all drilling in the Bakken, three sources familiar with the matter said on Tuesday, as production cuts intensify across the United States the aftermath of a historic plunge in crude oil prices.
The company has asked its frac crews in the region to take time off, known as a frac holiday, and will completely halt all drilling activity within weeks, two sources said.
Oasis did not immediately respond to a request for comment.
prices collapsed into negative territory for the first time in history last week – meaning sellers had to pay people to take oil – with storage space quickly filling up as the coronavirus pandemic sent global oil demand crashing by about 30%.
Oil producers across the country have scrambled to slash output and shut-ins have been particularly swift in North Dakota, which produced more than 1.4 million barrels per day (bpd) of oil in 2019.
Large operators including Continental Resources (NYSE:) Inc, the largest oil producer in North Dakota, have halted production in the U.S. state and notified some customers it would not supply crude after prices dived into negative territory last week.
Oasis planned to operate about 4 rigs throughout the year, with 2 in Williston basin, which is partly in North Dakota, and 2 in the Delaware in the Permian basin, the company said during the latest earnings call with analysts in late February.
North Dakota regulators plan on May 20 to consider whether oil production at low prices represents a waste of resources, according to a notice published by the North Dakota Industrial Commission.
U.S. shale producers came into the crisis with already high debt levels and more companies are expected to seek bankruptcy protection in coming weeks, industry and banking sources have said.
Oasis had long-term debt of about $2.7 billion at the end of 2019, according to its latest earnings statement.
“While Oasis’ cash flow deteriorates due to low commodity prices, the company will also face increasing debt refinancing risk,” Amol Joshi, Moody’s (NYSE:) Vice President and Senior Credit Officer said in a note this month. The ratings agency downgraded its rating on Oasis and changed its rating outlook to negative from stable.
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