Banks across the United States and around the world have restricted lending to the U.S. oil and gas sector.
BOK Financial Corp.
The Tulsa-based bank, which is owned by Bank of Albuquerque, Bank of Oklahoma and Bank of Texas, among other financial services firms, is majority owned by oil billionaire George Kaiser. It has snatched market share from major European banks and local rivals pulling out of the industry even as oil prices jump from historic lows. to an almost historic high in less than two years.
“We are proving that we can be aggressive,” said Stacy Kymes, chief executive officer of BOK. “Some have struggled with underwriting and credit risk management.”
The outlook for energy companies is much better today than in the depths of the pandemic, when oil gluts drive down prices, drivers stay home and airlines have to take flights.
Demand is back. Oil is currently in short supplya dynamic made worse by the following international sanctions on Russian oil Russia Invades Ukraine. Oil prices have skyrocketed, hitting multi-year highs around $100 a barrel, and so is the outlook for energy suppliers, who now have more access to capital from investors and remaining lenders in the sector.
BOK was the operator of $2 billion in loans to US oil and gas companies in the first quarter of this year, accounting for 6.7% of lending in the sector, according to data provider Refinitiv. The bank ranks fifth overall, behind the national giants
and JPMorgan Chase & Co.
In the first quarter, lenders’ energy loan balances grew by $191 million to $3.2 billion. Energy loans make up about 15% of the bank’s total books.
The lender added 19 new borrowers during the quarter, as others pulled back from the energy sector because they were trying to save money, Kymes said in an earnings call with analysts Wednesday. limit exposure to carbon-producing industries.
This year’s lending builds on last year, when the BOK ranked 11th in terms of oil and gas loans. The 2.8% market share is the bank’s all-time high.
Bank run up the league tables have come like Overall energy lending has fallendespite the recovery in oil prices.
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The $143.7 billion in U.S. oil and gas loans last year was the third-lowest total in the past 10 years, just above 2020, the year the pandemic began, and 2016, after Oil prices have collapsed from their 2014 peak, according to Refinitiv. Companies raised $219.9 billion by selling bonds last year, down 30% from 2020.
This year, high oil prices have boosted energy companies’ cash flows, so they don’t need to borrow as much to run their businesses. Many US manufacturers have said they have no intention of increasing productioneven with high oil prices, this is limiting their capital needs.
Banks are also reducing oil and gas lending to reduce their exposure for industries that emit greenhouse gases. Companies like
says it is cutting its exposure to the energy sector as part of broader climate change goals.
Other lenders have been stalled by the extremely volatile oil market making it difficult for them to assess risk.
The price of US benchmark West Texas Intermediate crude has fallen by more than 50% from 2014 to 2015. for the first time to be negative in 2020 at the start of the pandemic, and then more than $100 a barrel this year after Russia invaded Ukraine.
The volatility has made longtime lenders like San Antonio-based
shrinking lending books and reducing shareholder exposure to the oil market.
Bill Day, a spokesman for Cullen/Frost, said: “We are a bank and banks are not usually that volatile. “When investors buy a bank, they don’t think they’re buying energy.”
Cullen/Frost, which originated in Texas in the 1890s, is trying to reduce energy loans to about 5% of its total loan book. The bank said these loans accounted for 6.6% at the end of last year, down from 8.2% in 2020. In 2015, about 16% of all loans were to oil and gas companies.
“There is less capital available in the industry,” said Buddy Clark, a Houston-based partner in the energy practice of Haynes and Boone LLP.
Although the rise in oil prices has allowed banks to increase the size of the lines of credit they are providing to energy companies, which are backed by the value of oil reserves, banks are placing limits on the amount of credit. stricter limits on how much debt companies can carry and how they can use their loans. , he say.
“If you don’t have a lot of banks competing with each other for the latest loan deal, that means the banks that are selling capital can make a tougher deal,” he said.
For BOK, oil and gas remains the centerpiece. Mr. Kaiser, chairman of the board, acquired the company in 1990 from the takeover of Federal Deposit Insurance Corporation. The billionaire from Tulsa, Okla., now owns nearly 56% of the shares.
Mr. Kaiser Make your fortune in the oil and gas industryand owns Kaiser-Francis Oil Co. Earlier this year, he boosted his net worth by publicly listing Excelerate Energy Inc., a company specializing in the production of liquefied natural gas floating terminals.
However, Mr. Kaiser’s commitment to the industry does not boost stock prices in the short term. Shares of BOK have fallen about 20% this year. The company reported first-quarter net income that was $55 million lower than a year earlier, as profits were hit by the bank’s mortgage services and securities businesses, which affected by rising interest rates.
Write to Vipal Monga at [email protected]
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