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Bakken oil producer files for bankruptcy amid virus, low prices

Bakken oil producer files for bankruptcy amid virus, low prices

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BISMARCK, N.D. — One of North Dakota's largest oil producers filed for bankruptcy Wednesday, citing the coronavirus on top of plunging oil prices.

While Whiting Oil was filing for Chapter 11 protection, state leaders were looking at an expected $1.2 billion in aid from the federal bailout package - possibly enough with rainy-day money to avert the need to radically rework the state budget.

"There are so many unknowns right now but we can absorb a tremendous budget shortfall without a special session," state budget director Joe Morrissette said.

General fund revenue, which is funded largely by state taxes on income, sales and energy, was ahead of projections for the current two-year budget cycle by more than $106 million, Morrissette said.

The state also has $65 million from the prior budget cycle and a record $726 million in the state's Budget Stabilization Fund that can be tapped by the governor when tax collections fall short of expectations, though only after agencies endure across-the-board cuts.

"Having that kind of a cushion is super helpful," Morrissette said.

Republican Gov. Doug Burgum and the GOP-controlled Legislature have so far resisted some suggestions for a special session because of the virus and crashing oil prices. They also have not shown an "appetite" to tap the principle from the state's voter-approved oil tax savings account. The Legacy Fund now holds about $7 billion. Approval from two-thirds of the House and Senate is needed to spend the principal.

Morrissette said the state doesn't yet know when it will receive the $1.2 billion it's expecting from the federal economic stimulus package.

"We're still trying to determine how or if it can be applied to a revenue shortfall, or if it is only intended to cover the increase in state expenditures in relation to response to the coronavirus," he said.

The budget represents about $4.9 billion in state general fund spending for the 2019-21 budget cycle that starts July 1. General fund spending is up about 12.5% from what was approved by lawmakers two years ago. The general fund portion of the budget is spent on an assortment of programs, including education and human services.

North Dakota's coffers had been fatter than projected due to near-record drilling in its oil patch. But prices have dropped below $20 a barrel - and far from the $48 barrel forecast that was used to craft the current budget.

In filing for bankruptcy Wednesday, Denver-based Whiting Petroleum attributed its financial troubles to the coronavirus and an oil price war between Saudi Arabia and Russia.

Morrissette said as oil producers cut back, "it's not just the fact that oil taxes will fall short but all tax types are somewhat correlated to oil activity."

The number of confirmed cases of the coronavirus in North Dakota increased by 16 on Wednesday to a total of 142. Three people in North Dakota have died of COVID-19, the disease caused by the coronavirus. All of the victims were elderly and had underlying health conditions.

For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.

In Minot, a police officer was quarantined at home after testing positive for the coronavirus and five other officers who were in contact with that officer were self-isolating. Chief John Klug told The Associated Press that the officer who tested positive did not need hospitalization.

The virus is now present in 23 of North Dakota's 53 counties.

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