Upstream Credit Facility

01 Overview

A reserve based lending facility restructured for a mid cap producer operating across two basins. Reserve-based lending and Mid-cap producer. The figures on this page are illustrative of the kind of outcome the mandate targeted, not a promise of future results.

02 The challenge

The producer was carrying an expensive, covenant-heavy facility set against a conservative price deck. As production grew across both basins, the borrowing base had not been re-based, leaving cheap collateral idle and cash trapped by tight maintenance covenants.

03 What we did

• Re-modelled the borrowing base against updated reserve reports and a realistic strip, freeing additional headroom.
• Negotiated a lower margin and looser maintenance covenants in exchange for a clearer hedging policy.
• Layered in commodity hedges sized to the debt service, so the facility could take a price shock without breaching.

04 The outcome

The refinanced facility lowered the effective cost of debt and released capital for the next drilling programme, lifting the net yield on the producer's financing structure by roughly 30 percent versus the prior arrangement.

Capital is at risk. Past performance is not a guide to future returns, and the figures shown are illustrative. Back to all case studies.