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Private Equity Jumps Into The Oil Patch

Friday, August 19 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Banks cutting energy exposure

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- The eight largest banks have cut their lending to the oil and gas industry by an average of 6.3 percent in the first half of 2016, Bloomberg recently reported. Total lending through the first two quarters dropped from $2.34 trillion to $2.19 trillion from the same period in 2015.
- Morgan Stanley has cut its energy exposure the most, slashing lending by 22 percent.
- Wells Fargo says that the volume of energy loans that might not be repaid has ballooned from $35 million to $2.55 billion.
- Bloomberg Intelligence found that more than a dozen oil and gas companies have used up 90 percent of their credit lines. With traditional lending turning its back on oil and gas, private equity is filling the void (see below).

2. Private equity jumping into oil patch

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- Over $100 billion has been raised by private equity to scoop up distressed oil and gas assets since 2014.
- Many oil companies turned to new debt and equity issuance over the past two years, and banks were willing to keep credit lines open. But with loans no longer easy to come…

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