Corporate lending to U.S. oil and gas producers climbed noticeably during 1999's third quarter, thanks largely to higher crude oil prices worldwide, Loan Pricing Corp. reports. The lending data and publishing subsidiary of Reuters Group Plc said that oil and gas lending activity totaled some $19 billion during the third quarter, $3 billion more than the roughly $16 billion posted during the second quarter. A rise in crude oil prices to as much as $25 during the third quarter provided more revenue to oil and gas producers, making those companies more attractive corporate debt prospects. "Oil and gas companies have been relatively inactive in the corporate loan market, certainly due in some part to depressed oil prices," said LPC president Jim Davis. "That, however, is starting to change. While both borrowers and lenders in this cyclical industry are proceeding with caution, the market is heating up." He noted that the oil and gas loan volumes during the 1999 second and third quarters stand in stark contrast to the meager $8.78 billion posted during the first three months of the year. Volume during that period was hindered greatly by crude oil prices that were as low as $12 per barrel, Davis said. "Bankers focusing on oil and gas are optimistic for the coming year because of increased cash flow and earnings for such companies. These enable funding of future oil and gas projects, which, in turn, create demand for corporate finance, such as bank loans," he observed. "Bankers also expect continued merger and acquisition activity to produce oil and gas-related loan volume, as it did in the third quarter." -Petroleum Finance Week

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