Those who minded E&P finances back in 2016 will recall the fallout from some of the regulatory guidelines introduced by the Office of the Controller of the Currency. Banks in energy lending in some cases had to add reserves for “criticized” loans; a number of regional banks scaled back or exited entirely from the energy sector; and second lien business by banks dropped off dramatically.

“Even some of the larger banks have a very restrained appetite for second-lien exposure currently,” said one long-standing industry observer. “The second-lien market is really tough now.”

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