An already scantily clad debt market became even more threadbare in 2020, leading oil and gas companies and lenders in the space to find alternative solutions in the New Year.

The number of banks willing to risk exposure to the oil and gas sector has dropped and some institutions have pulled up stakes completely, panelists said during a January panel hosted during IPAA’s Private Capital Conference. E&Ps can expect tighter reserve-based lending (RBL) structures and smaller capital raises as investment vehicles such as volumetric production payments are dusted off.

Phil Ballard, managing director and head of reserve-based lending at Citi, said oil and gas spent the past 12 months surviving an existential crisis. As many as a third of banks decided to exit reserve-based lending because of their losses or the perception of a perpetually wobbly market.

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