Energy, Finance & the GoM
Some positive market indicators could presage an investment revival in the U.S. Gulf of Mexico – and beyond. The good news, reported by Bloomberg, is that in the third quarter of 2016, the largest oil companies increased cash from operations by nearly $26 billion. This reflects a 67 percent increase from the previous quarter and more than twice the amount of the first quarter of 2016. Exxon Mobil, Royal Dutch Shell, Chevron, Total and BP indicated that the increase was due to lower spending, increased output and rising crude prices, although the numbers were still below last year’s numbers.
Choosing the Best Financing Proposal
It isn’t always about the rate. In a robust boatbuilding market – like the one we see now – even the most successful, financially stable operators need to borrow. And, if that newbuild or conversion program involves a significant fleet expansion, then everyone will need to leverage their business model. So, you’ve assembled and sent off your financial package to a handful of lenders, answered most of their questions and now have a number of their proposals or term sheets in front of you. While the proposals are generally similar, some are not, especially from non-commercial marine lenders and may contain arcane language or confusing structure.
How Specialty Lenders Can Propel Marine Operators
The surge in the shale gas industry in the U.S., as well as stepped up oil exploration in the Gulf of Mexico, is creating enormous demand for marine assets to transport fuels and supplies. To seize this growth opportunity, mid-size marine operating companies with annual revenues from $10 million to $1 billion must address several important issues. First, what is the most efficient way to finance equipment to keep up with the robust demand? Is ownership of the vessel through a loan structure the best option, or would a lease make better use of working capital?
