• 5 minutes Global Economy-Bad Days Are coming
  • 8 minutes IT IS FINISHED. OPEC Victorious
  • 14 minutes Venezuela continues to sink in misery
  • 17 minutes Could Tesla Buy GM?
  • 9 hours Paris Is Burning Over Climate Change Taxes -- Is America Next?
  • 38 mins OPEC Cuts Deep to Save Cartel
  • 7 hours What will the future hold for nations dependent on high oil prices.
  • 15 mins Price Decline in Chinese Solar Panels
  • 2 hours And the War on LNG is Now On
  • 2 hours Alberta Cuts Push Prices Too High
  • 22 hours Congrats: 4 journalists and a newspaper are Time’s Person of the Year
  • 23 hours How High Can Oil Prices Rise? (Part 2 of my previous thread)
  • 19 hours USGS Announces Largest Continuous Oil Assessment in Texas and New Mexico
  • 1 day Permian Suicide
  • 2 days Asian stocks down
  • 2 days GOODBYE FOREIGN OIL DEPENDENCE!!
Alt Text

Qatar’s OPEC Exit May Just Be The Beginning

Qatar shocked markets yesterday with…

Alt Text

Saudis Won’t Cut Oil Production On Their Own

Saudi Oil Minister al-Falih has…

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

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:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




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