Industry watchers are expecting US companies to have their ability to borrow money lowered drastically during annual redeterminations with lenders as the impact of a full year of low oil and natural gas prices bites into the value of their assets.
“Based on fourth-quarter conference calls and our conversations with management teams, the E&P space will likely see a steeper reduction to average borrowing bases than the roughly 5% reduction that we saw for the group as a whole last fall, with many companies alluding to potential 15% to 25% reductions,” analysts at investment bank Capital One Southcoast said in a recent note to clients.
