As debt issued by oil and gas exploration and production companies continues to trade at distressed levels, the secondary loan market has focused on the distinct lending structures developed to finance the exploration and production of energy in the United States. One such structure is “reserve-based financing,” under which a lender’s commitment to lend is based on the predicted future value of the oil and gas reserves of the borrower that serve as collateral for the loan.
Reserve-based revolvers present unique challenges and opportunities for participants in the secondary trading market for energy loans. In this client alert, Richards Kibbe & Orbe partner Julia Lu provides a roadmap for market participants as they identify, analyze and attempt to value reserve-based energy loans and commitments.
Please click here to read "Trading Reserve-Based Energy Loans."