Borrowing Bases Likely to Increase

Oil and gas producers are expecting an improved outlook for the energy industry and plan to ramp up their borrowing bases in the future, according to a survey conducted by law firm Haynes and Boone.

In its recent poll, 78% of the oil and gas producers said they plan to increase their borrowing bases while 36% of companies said they predict their borrowing bases to rise by 20% or greater. This rate of optimism is on par with the law firm’s spring 2018 survey.

The loans that E&P producers obtain are assessed by their lenders twice a year to determine the amount of credit that will be available based upon the collateral value of the producers’ property. These borrowing bases affect the projections from banks about future prices for the producers’ oil and gas reserves.