As oil flows in the US, so does borrowing power: Fuel for Thought

Credit lines for US oil and gas producers set to rise in 2018 US E&P companies needing cash for drilling are likely to hear good news from banks currently preparing to size up borrowing profiles, as upstream activity continues to tick higher. „„With crude prices sustained at above $60/b, the upcoming round of credit-worthiness reviews could see bank lending increase by the low double-digits. Haynes and Boone, in its spring 2018 survey of oil and gas borrowers and lenders, saw a “modestly improved” outlook for the upstream industry. The survey, which polled dozens of upstream lenders, producers, and oilfield service providers, showed most expected a 10%-20% increase in E&P borrowing bases. “That is the most positive response we’ve had since we started the survey in 2015,” said Kraig Grahmann, head of Haynes and Boone’s energy finance practice group. E&P borrowing bases will most likely inch up, particularly for those focused on the most impactful plays like the Permian, Ben Tsocanos, oil and gas director for S&P Global Ratings, said. “I think banks are in a lending mood,” Tsocanos said. “Oily Permian [Basin] companies especially will probably see meaningful increases of about 20%” in their ability to borrow money. “They’re under… continue reading

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