• 3 minutes 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 6 minutes "Leaked" request by some Democrats that they were asking Nancy to coordinate censure instead of impeachment.
  • 11 minutes Trump's China Strategy: Death By a Thousand Paper Cuts
  • 14 minutes Democrats through impeachment process helped Trump go out of China deal conundrum. Now Trump can safely postpone deal till after November 2020 elections
  • 2 hours Shale Oil Fiasco
  • 15 mins Everything you think you know about economics is WRONG!
  • 3 mins Wallstreet's "acid test" for Democrat Presidential candidate to receive their financial support . . . Support "Carried Interest"
  • 10 hours USA v China. Which is 'best'?
  • 10 hours Global Debt Worries. How Will This End?
  • 1 day My interview on PDVSA Petrocaribe and corruption
  • 9 hours Judiciary impeachment: Congressman says Sean Misko, Abigail Grace and unnamed 3rd (Ciaramella) need to testify.
  • 2 days Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 17 hours Quotes from the Widowmaker
  • 2 days Petroleum Industry Domain Names
  • 17 hours Tesla Launches Faster Third Generation Supercharger
  • 10 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
  • 10 hours Winter Storms Hitting Continental US
Alt Text

Coal Is Dead, But China Is Reviving It

Coal consumption in Europe and…

Alt Text

The Fastest Growing Energy Sectors Of 2019

The world saw a significant…

Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

More Info

Premium Content

Wells Fargo Reduces 66% of Credit Lines to Oil and Gas Players

Around 66 percent of Wells Fargo’s credit lines to energy exploration and production companies have been reduced as a result of the two-year drop in oil prices, The Street reported.

The E&P loans make up more than half of the San Francisco-based bank’s US$17.8 billion in loans to oil and gas ventures. Just under half of the outstanding loans have been vetted so far, according to a presentation by CFO John Shrewsberry on Tuesday.

Major American banks that have offered credit lines to oil and gas companies have seen their stock prices drop as investors become nervous that the debtors would default from price pressures. Not a mad thought as the debt to EBITDA ratio of many distressed U.S. oil drillers is topping 7.0

Shrewsberry said Wells Fargo’s total oil and gas portfolio, including credit lines that have not been used yet, equals US$40.7 billion dollars. Less than a quarter of the serviced borrowers were from investment grade companies, the CFO added. Related: OPEC Head Calls for $65 Oil

Image courtesy: Motley Fool

Related: Mozambique’s LNG Dreams Falling Apart

However, U.S. banks have something to look forward to this summer as The Federal Reserve Bank has hinted at a potential interest rate hike in June, which could play in favor to Wells Fargo. The Fed’s interest rates have been near zero for nearly seven years.

In the fourth quarter of last year, the Fed had said it might increase interest rates four times this year. But, after the oil price drop again earlier this year, it revised its forecast.

"The prospect for higher rates…helps widen the spread between what banks charge on loans and what they charge on deposits, thus lifting margins and boosting earnings power," Jim Cramer, the owner of the charitable trust that holds Wells Fargo, said.

By Zainab Calcuttawala for Oiprice.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
Download on the App Store Get it on Google Play