Banks have given a handful of U.S. oil companies an extra financial boost this month, increasing the amount of money they can borrow for new drilling projects and other purposes.
Lenders have recently lifted the so-called borrowing bases of Houston’s Oasis Petroleum, Ultra Petroleum, Wildhorse Resource Development Corp. and Midland-based Concho Resources, a sign of a thaw between banks and the energy industry after a two-year oil bust.
During the downturn, banks downgraded billions in energy loans and virtually stopped issuing new ones as drillers and service companies wrestled to keep up with interest payments amid falling revenues.
They also sharply cut borrowing bases, the amount oil companies can borrow under revolving credit facilities — a kind of corporate loan from which drillers can borrow, pay back and borrow again. But now, analysts expect lenders will look more favorably on the industry as oil prices stabilize above $50 a barrel, a dramatic improvement for drillers compared to the days of $30 oil early last year.
Oasis Petroleum said Thursday lenders boosted its borrowing base from $1.15 billion to $1.6 billion. Ultra Petroleum said its borrowing base was raised from $1 billion to $1.2 billion as it emerged from bankruptcy. Wildhorse’s borrowing base rose from $362 million to $450 million. And Concho Resources’ base increased from $2.8 billion to $3 billion, according to regulatory filings.
“With an increase in the borrowing base, (Wildhorse) has even more flexibility in funding its 2017 development program,” Wildhorse Chairman and CEO Jay Graham said in a statement.
This story first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.