• 6 minutes Trump vs. MbS
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes WTI @ $75.75, headed for $64 - 67
  • 14 hours US top CEO's are spending their own money on the midterm elections
  • 1 hour Satellite Moons to Replace Streetlamps?!
  • 12 hours EU to Splash Billions on Battery Factories
  • 22 hours Petrol versus EV
  • 10 mins The Balkans Are Coming Apart at the Seams Again
  • 13 mins The Dirt on Clean Electric Cars
  • 16 hours OPEC Is Struggling To Deliver On Increased Output Pledge
  • 25 mins U.S. Shale Oil Debt: Deep the Denial
  • 11 hours Uber IPO Proposals Value Company at $120 Billion
  • 17 hours U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 14 hours A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 2 hours 47 Oil & Gas Projects Expected to Start in SE Asia between 2018 & 2025
  • 18 hours 10 Incredible Facts about U.S. LNG
Alt Text

The Next Pillar Of Oil Demand Growth

Pundits continue to discuss peak…

Alt Text

U.S. Oil Companies Face $240 Billion Debt Mountain

U.S. oil producers are facing…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

More Info

Trending Discussions

Higher Prices To Help Oil Companies Refinance $400B In Debt

Crude pipeline

Oil and gas companies that took a lot of loans and issued five- and seven-year notes in the “exuberance” years before 2014 are likely to get more favorable terms from lenders when they negotiate refinancing of debts worth a total of US$400 billion due by the end of 2019—because of the higher oil prices that boost their credit profiles.

According to data by Thomson Reuters LPC, the oil and gas sector has a combined US$833.3 billion of loans outstanding. Of those, US$399.5 billion is maturing by the end of next year, while US$138.4 billion is due by the end of this year.

Higher oil prices and increased oil production in the United States are also boosting the companies’ financial positions and they start to generate higher cash flows and boost profit margins.

“Back between the years of 2012 and 2014, there was an irrational exuberance going on where oil prices were high and interest rates were low and there were a lot of deals getting done,” Thomas Watters, managing director in the oil and gas ratings group at S&P Global, told Reuters. “A lot of high-yield credits came out first-time financing and they issued five- to seven-year papers. Higher oil prices will no doubt help them refinance.”

According to John Yovanovic, head of high yield portfolio management at PineBridge Investments, the credit market “ought to be thrilled with any WTI price above US$60 per barrel.” Related: Canada To Buy Kinder Morgan’s Trans Mountain Expansion Project

The market should be watching closely an increased default risk if oil prices drop below US$45-50 per barrel, Yovanovic told Reuters, but noted that he believed that WTI Crude “is not going sub-US$60 any time in the near future.”

Higher oil prices are also helping companies operating in the fastest-growing U.S. shale play, the Permian, to see their borrowing bases increased substantially.

Haynes & Boone’s latest survey found that more than 80 percent of U.S. oil companies expected borrowing bases this year to rise, which means the value of borrowers’ assets used as collateral when taking out loans will be higher.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:


x


Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News