Money will always be available for well-structured E&P projects and companies with a compelling story, according to speakers at the recent energy financing conference in Houston, arranged by The Center for Business Intelligence. "2002 was a difficult year for project finance," said Steven Greenwald, managing director of the global energy and project finance group at Credit Suisse First Boston. Fewer banks were involved, and the ones that were lending called for increased sponsor support, shorter terms, more robust financial base cases, and an increased focus on "old school" project finance skills such as risk allocation and financial modeling. In 2002, worldwide oil and gas project financings totaled $9 billion, compared with $13 billion in 2001 and in 2000. Deals still being done include several for pipeline projects, and liquefied natural gas terminals are becoming the "flavor of the month," he said. The firm completed an $875-million construction facility to finance 70% of the cost of the proposed Kern River Gas Transmission pipeline 2003 expansion project. The bank facility consisted of a two-year construction facility, converting to a 15-year term loan. The loan is expected to be outstanding for only one year; it is expected to be refinanced in the capital markets this year. Dennis Petito, senior vice president and head of the U.S. energy, power and pipelines group at Credit Lyonnais Americas, said the bank syndication market has changed. From 1990-95, there were 43 U.S. banks participating in syndicated loans; in 2002, there were 11. For the U.S., Europe and Japan combined, the number of banks dropped from 101 to 31. Among bank investors, there is an increasing willingness to walk away from long-term relationships unless credit and return hurdles are met, and there is a tendency to wait out primary syndications in favor of secondary buying, Petito said. Also, ancillary business is increasingly required to immediately justify the booking of loans. Scott Johnson, co-founder of Weisser, Johnson & Co., expects a couple of new mezzanine-finance participants will enter that arena this year, bringing relief to smaller companies trying to fund strong projects. For private equity overall, Johnson believes 2003 deal volume will be higher than in 2002. -Jodi Wetuski