Bracewell’s Dewey Gonsoulin and Kate Day discussed with Law360 how ESG commitments and the current marketplace are driving traditional reserve based lenders and private equity funds to scale back or even eliminate new oil and gas lending.
“Banks are a little loath to tell companies how to operate and what to do,” said Gonsoulin. “Having said that, the oil and gas companies that are still oil and gas companies but are trying to find ways to operate differently and with more of an ESG mindset, those companies are going to be shown a little more favor.”
Day added the example of how private equity funds that engage in direct lending are no longer willing to be part of any mezzanine or other subordinate credit facility following the bankruptcy waves in 2016-2017 and 2020, and the ensuing slumps in oil price.
“The biggest change is that those guys are not providing second lien capital,” Day said.
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