December 19, 2019 - On December 10th, the LSTA hosted the Semi-Annual Oil & Gas Industry Update presented by Jeff Nichols, Kim Mai, Kraig Grahmann, and Eli Columbus of Haynes and Boone, LLP. The US oil industry has doubled in size in the past decade; however, although demand is growing, the supply of low-cost energy is growing faster, and thus uncertainty continues because of the depressed pricing environment. E&P producers are definitely feeling the pressure amidst a continuing sell-off of oil and gas leveraged loans, and more of them are focused on reducing commodity price risk in 2019. Only approximately 5% of respondents to the Haynes and Boone Borrowing Base Redetermination Survey believe that capital markets will be a source of capital for E&P producers in the months ahead, and the vast majority believe that it will be 2021 or later before producers will have access to the equity capital markets. Parties have been creative with financing structures in the past year, so listeners were cautioned that if a borrower is party to a DrillCo, has monetized a midstream contract, or has a physical futures contract arrangement, then that can impact the credit agreement, and lenders should carefully review the terms of their credit agreements and check in with their counsel. Click here for the replay and presentation slides.
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