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Tuesday, 26 April 2016

Bankers Desperately Monetize Energy Loans to Mitigate Losses

  • Reserves-backed loans trading hands amid regulatory pressure
  • Some lenders selling RBLs at steep discounts: Haynes & Boone




 Wary Energy Bankers Trying to Sell Loans Backed by Oil Reserves   


Banks are trying to unload loans once thought to be the safest form of energy credit.
Debt backed by oil and gas reserves are being offered at discounts as increased scrutiny by regulators and investors has forced lenders to set aside more cash to cover losses, the law firm Haynes & Boone LLP said in a note to be delivered to clients Monday. Some banks that bought slices of syndicated loans may try to sell their entire portfolio, according to the note.
Reserves-based lending was long considered safe because banks historically got back every penny they lent, even after default, according to a 2013 Standard & Poor’s report. Moody’s Investors Service Inc. said in an April 7 report that lenders could lose 21 cents on the dollar on defaulted exploration and production loans, four times more than the historical average.



Will Oil And Refugees Force European Intervention In Libya 


Europe is on track to send security experts to Libya after it successfully installed a so-called unity government that is willing to work with international agencies. A primary goal of this move will be to address the problem of the smuggling of people to Europe. The move is in the planning stage. EU officials have declared that help will be sent should the new government, called the Government of National Accord (GNA), ask for assistance, which it did earlier this week. The GNA has asked for help from the EU in general, with an emphasis on restoring the security of the country and dealing with militant groups. European officials have underlined that Europe’s involvement in Libya will not be military, but it seems this is a temporary decision. First of all, the GNA is not recognized by other unofficial governments that control different parts of the country, so its […]


Cheap Oil Doesn’t Light Fire for Big Japanese Utility

Like most energy importers, Japan’s gas utilities have enjoyed the collapse in crude oil prices. Yet the market is understating the risks at one utility, including its duplicate role as an energy investor. Osaka Gas , 9532 -1.49 % one of Japan’s largest suppliers of natural gas, imports liquefied natural gas that is often linked to oil prices. Though the utility passes on lower costs to customers, this comes with a lag, the effect of which is even more powerful if crude oil keeps falling. In the December quarter, Osaka Gas reported a 55.4% increase in net profit from the year before, despite a 10.5% decrease in sales. But while a sustainable oil rebound may be unlikely , neither may there be much room for it to continue falling . As some producers cut back, Brent futures are pricing a slight rise later this year. A liquefied natural gas […]

AP Exclusive: Test finds Chernobyl residue in Belarus milk

On the edge of Belarus’ Chernobyl exclusion zone, down the road from the signs warning “Stop! Radiation,” a dairy farmer offers his visitors a glass of freshly drawn milk. Associated Press reporters politely decline the drink but pass on a bottled sample to a laboratory, which confirms it contains levels of a radioactive isotope at levels 10 times higher than the nation’s food safety limits. That finding on the eve of the 30th anniversary of the world’s worst nuclear accident indicates how fallout from the April 26, 1986, explosion at the plant in neighboring Ukraine continues to taint life in Belarus. The authoritarian government of this agriculture-dependent nation appears determined to restore long-idle land to farm use – and in a country where dissent is quashed, any objection to the policy is thin. The farmer, Nikolai Chubenok, proudly says his herd of […]




Halliburton Fires One Third Of Global Staff: “What We Are Experiencing Today Is Far Beyond Headwinds”


In a brutally frank and painfully honest first quarter operational update, Halliburton president Jeff Miller poured freezing cold water all over the “oil is stabilizing, and everything is going to be awesome” narrative. After explaining that the firm has laid off one-third of its global employees, and pointing to the collapse in sequential revenues across every business unit, Miller exclaimed: “What we are experiencing today is far beyond headwinds; it is unsustainable.” Due to the deadline of its merger agreement with Baker Hughes Halliburtion has delayed its earnings conference call until May 3rd and so gave an operational update.

 The headlines were horrific: 

*HAL SEES OVER 30% DROP IN YR GLOBAL DRILLING, COMPLETION SPEND *HALLIBURTON CUT ABOUT 1/3 OF STAFF GLOBALLY *HALLIBURTON CUT OVER 6,000 JOBS DURING 1Q *HALLIBURTON SEES ADDITIONAL 50% DECLINE IN NORTH AMERICA SPEND ’16 *HALLIBURTON SAYS WORLDWIDE RIG COUNT LOWEST LEVEL SINCE 1999 *HALLIBURTON SEES […]


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