Banks all around the U.S. and all over the world have curtailed lending to the U.S. oil-and-gas sector.
BOK Financial Corp.
BOKF 1.09%
has doubled down.
The Tulsa, Okla.-based financial institution holding firm for the Bank of Albuquerque, Bank of Oklahoma and Bank of Texas, together with different financial-services firms, is majority-owned by billionaire oilman
George Kaiser.
It has been snatching market share from massive European banks and native rivals that retreated from the business at the same time as oil costs leapt from historic lows to near-historic highs in lower than two years.
“We’re demonstrating that we can be very aggressive,” stated
Stacy Kymes,
BOK’s chief government officer. “Some have struggled with underwriting and managing the credit risk.”
The outlook for power firms at this time is significantly better than within the depths of the pandemic, when an oil glut depressed costs, drivers stayed dwelling and airways grounded flights.
Demand has returned. Oil is now briefly provide, a dynamic worsened by worldwide sanctions on Russian oil following Russia’s invasion of Ukraine. Oil costs have jumped, reaching multiyear highs round $100 a barrel, and so have the prospects of power suppliers, who now have extra entry to capital from buyers and the remaining lenders within the sector.
BOK was bookrunner on $2 billion in loans to U.S. oil-and-gas firms through the first quarter of this 12 months, representing 6.7% of lending within the sector, in keeping with knowledge supplier Refinitiv. The financial institution ranked fifth general, behind nationwide giants
Wells Fargo & Co.,
Bank of America Corp.,
Citigroup Inc.
, and JPMorgan Chase & Co.
During the primary quarter, the lender’s energy-loan balances elevated by $191 million to $3.2 billion. Energy loans make up about 15% of the financial institution’s whole guide.
The lender added 19 new debtors through the quarter, as others backed away from the power sector as a result of they have been making an attempt to restrict publicity to carbon-producing industries, stated Mr. Kymes throughout an earnings name with analysts on Wednesday.
This 12 months’s lending builds on final 12 months, when BOK was eleventh in oil-and-gas loans. Its 2.8% market share was the financial institution’s highest ever.
The financial institution’s run up the league tables has come as general power lending has fallen, regardless of a rebound in oil costs.
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Last 12 months’s $143.7 billion in U.S. oil-and-gas mortgage financing was the third-lowest whole previously 10 years, larger solely than 2020, the 12 months the pandemic started, and 2016, after oil costs had collapsed from their 2014 highs, in keeping with Refinitiv. Companies raised $219.9 billion by promoting bonds final 12 months, a 30% drop from 2020.
This 12 months, excessive oil costs have boosted power firms’ money flows, so that they don’t have to borrow as a lot to run their companies. Many U.S. producers have stated they don’t intend to extend manufacturing, even with excessive oil costs, which is limiting their want for capital.
Banks have additionally been decreasing oil-and-gas lending to cut back their publicity to greenhouse gas-emitting industries. Firms corresponding to
HSBC Holdings PLC,
Barclays PLC
and
Bank of Montreal
have stated they’re chopping their publicity to the power sector as a part of broader climate-change targets.
Other lenders have been postpone by a particularly risky oil market that has made it tough for them to evaluate danger.
Prices for U.S. benchmark West Texas Intermediate crude plunged by greater than 50% between 2014 and 2015, turned detrimental for the primary time in 2020 at the start of the pandemic, after which jumped over $100 a barrel once more this 12 months after Russia’s invasion of Ukraine.
The volatility has prompted longtime lenders corresponding to San Antonio-based
Cullen/Frost Bankers Inc.
to shrink lending books and scale back shareholder publicity to the oil market.
“We’re a bank, and banks typically aren’t that volatile,” stated
Bill Day,
a Cullen/Frost spokesman. “When investors buy a bank, they don’t think they’re buying energy.”
Cullen/Frost, whose Texas roots return to the Eighteen Nineties, is making an attempt to cut back power loans to roughly 5% of its whole lending guide. Those loans made up 6.6% of the financial institution’s guide on the finish of final 12 months, down from 8.2% in 2020. In 2015, roughly 16% of all its lending was to oil-and-gas firms, the financial institution stated.
“There’s less capital available washing around the industry,” stated
Buddy Clark,
a Houston-based companion within the power apply of Haynes and Boone LLP.
Although rising oil costs have allowed banks to extend the scale of the credit score strains they’re providing power firms, that are backed by the worth of oil reserves, banks are setting stricter limits on how a lot debt firms can carry and the way they will use their borrowings, he stated.
“If you don’t have a bunch of banks competing with one another to get the latest loan transaction, that means that the banks who are selling capital can make a tougher deal,” he stated.
For BOK, oil and gasoline stay central. Mr. Kaiser, chairman of board, purchased the agency in 1990 out of receivership from the Federal Deposit Insurance Corp. The billionaire from Tulsa, Okla., now owns a virtually 56% stake.
Mr. Kaiser made his fortune within the oil-and-gas business, and owns Kaiser-Francis Oil Co. Earlier this 12 months, he boosted his internet price by publicly itemizing Excelerate Energy Inc., an organization that makes floating liquefied-natural-gas terminals.
Mr. Kaiser’s dedication to the business hasn’t helped share costs within the brief time period, nonetheless. BOK’s inventory is down roughly 20% to this point this 12 months. The firm reported first-quarter internet revenue that was $55 million decrease than a 12 months earlier, as revenue was weighed down by the financial institution’s mortgage-servicing and securities-trading companies, damage by rising rates of interest.
Write to Vipal Monga at [email protected]
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