REFILE-Mid-sized European oil firms face tough choices as oil stays low

Thu Sep 17, 2015 11:37am EDT
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(Fixes spelling of Jon in paragraph 15)

* Boards seeking ways to bridge funding gaps

* Asset sales, stock issuance, new investors considered

* Graphic: Oil companies debt vs oil price

By Ron Bousso

LONDON, Sept 17 (Reuters) - Small and medium-sized oil companies, squeezed by the oil price slump, may have to raise expensive new finance, sell assets or seek new investors to plug any funding gaps as banks tighten up on lending.

Many of these companies have already cut spending and axed thousands of jobs following a more than halving in the oil price to around $50 a barrel since June last year.

But they may need to do more as revenues fall and the oil price looks set to stay low. Oil's fall last month to its lowest since early 2009 at just above $40 a barrel has dashed hopes in the oil industry for a swift recovery.

In many cases, banks lend money based on a company's oil and gas reserves base, in what is known as reserve-based lending, so, in theory, the lower the oil price outlook, the smaller the loan or credit line.   Continued...