Article

2019-10-28 Economy

Small oil-and-gas companies get cold shoulder from large banks

NEW YORK (Reuters) - The largest banking lenders to the oil and gas sector are becoming more cautious, marking down their expectations for oil and gas prices that underpin loans in a move expected to put further financial stress on struggling producers, industry and banking sources said.

Major banks including JPMorgan Chase (JPM.N), Wells Fargo (WFC.N), and Royal Bank of Canada (RY.TO) have, as part of regular biannual reviews, cut their estimated values for oil-and-gas companies’ reserves, which serve as the basis for those companies to receive reserve-based loans (RBLs), according to more than a dozen sources familiar with the activity.

While the size of the RBL market is unclear, it is estimated that a few hundred companies take such loans, with the cumulative size in the billions of dollars.

Those lenders have marked down the perceived value for both oil and natural gas for the coming five years, with the changes kicking in as early as this month.

Posted by Besoeker 2019-10-28 05:09|| || Front Page|| [11136 views ] Top

#1 This is either an unprecedented disaster (oh noes!) or simply the result of lower oil prices (thank you frackers!) and a long-term outlook that prices will stay low.

Note that none of the recent disturbances in the Middle East sent oil prices skyrocketing as they would have in the past. I wonder why that is.

Posted by SteveS 2019-10-28 10:46|| 2019-10-28 10:46|| Front Page Top

#2 Small companies shouldn't use banks...

I think BANKS put out these articles hoping some suckers will think OK they need a subsidy to loan (AKA taxpayer funded profits).

Posted by Bright Pebbles 2019-10-28 16:11|| 2019-10-28 16:11|| Front Page Top

07:54 Grom the Affective
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