• 4 minutes Nord Stream 2 Halt Possible Over Navalny Poisoning
  • 8 minutes America Could Go Fully Electric Right Now
  • 11 minutes JP Morgan says investors should prepare for rising odds of Trump win
  • 1 hour US after 4 more years of Trump?
  • 2 days Daniel Yergin Book is a Reality Check on Energy
  • 3 days Permian in for Prosperous and Bright Future
  • 17 mins Something wicked this way comes
  • 46 mins Why NG falling n crude up?
  • 2 days Famine, Economic Collapse of China on the Horizon?
  • 2 days Oil giants partner with environmental group to track Permian Basin's methane emissions
  • 3 days Gepthermal fracking: how to confuse a greenie
  • 3 days YPF to redeploy rigs in Vaca Muerta on export potential
  • 3 days Top HHS official takes leave of absence after Facebook rant about CDC conspiracies
  • 17 hours The Perfect Solution To Remove Conflict Problems In The South China East Asia Sea
  • 2 days Open letter from Politico about US-russian relations
  • 4 days Surviving without coal is a challenge!!
China Not Looking To Ban Gasoline Powered Cars Any Time Soon

China Not Looking To Ban Gasoline Powered Cars Any Time Soon

The world’s largest automotive market,…

Should You Buy Into This Oil Rally?

Should You Buy Into This Oil Rally?

Technical and fundamental factors are…

Is This The Cleanest Energy On Earth?

Is This The Cleanest Energy On Earth?

As the green revolution kicks…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

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

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:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




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