The law firm Haynes and Boone today released the results of its “Fall 2018 Borrowing Base Redeterminations Survey,” which shows a bright outlook for oil and gas producers.

The firm provided key takeaways from its 2018 Fall survey:

  • Respondents have a positive outlook about fall 2018 borrowing bases – over 78 percent expect borrowing bases to increase, with 36 percent expecting 20 percent or greater increases.
  • Strong oil prices are leading borrowers to roll forward their hedging. The respondents estimate that producers have a significant percentage – 50 to 60 percent – of their 2019 production hedged.
  • Fall 2018 expectations regarding capital sources were almost identical to our spring 2018 survey results. Producers continue to favor cash flow from operations, bank debt and private equity as their primary sources of capital.
  • Oil and gas producers’ biggest concern in 2019, by a significant margin, is midstream capacity

Twice a year, the firm polls oil and gas producers, oilfield services companies, energy lenders, private equity firms, and other industry participants to get their predictions about producers’ future borrowing capacity or “borrowing bases.”

September polling revealed that out of the 123 respondents more than 78 percent expect borrowing bases to increase, with 36 percent of respondents expecting borrowing bases to increase by 20 percent or greater, a rate of optimism that is on par with the firm’s spring 2018 survey. The survey, which the firm has conducted since April 2015, offers a clear, forward-looking view about the projected financial state of the domestic energy market.

The survey results are part of the firm’s comprehensive Fall 2018 Energy Roundup, which also includes updated data on bankruptcy filings by energy companies. The filings show a continued decline from the surge that followed the oil price collapses that started in late 2014. Haynes and Boone tracks bankruptcy filings by energy companies in three databases that it updates periodically: the Oil Patch Bankruptcy Monitor, which tracks filings by oil and gas producers; the Oilfield Services Bankruptcy Tracker, which covers filings by oilfield services companies; and the Midstream Report, covering midstream companies.


The complete fall presentation is posted here.


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