Jim Bradly on the changing investment landscape for E&P companies

An interview with Jim Bradly, Upstream Consulting Manager at RPS

We interviewed Jim Bradly, Upstream Consulting Manager at RPS, in advance of the panel session he will be co-chairing at this year's SPE Upstream Finance and Investments Conference. The session is titled “The New Vanguard of Privately Financed E&P Companies”.

What trends or shifts are you seeing in the financing of independent E&P companies in the last few years?

"Raising finance for oil and gas projects is becoming more complex and challenging. Recent announcements from the World Bank and Royal Bank of Scotland, for example, show that banks are under significant pressure to end provision finance to the resource extractives industry. Some have already done so.

As a result of this contraction of available finance from more traditional sources, several private equity investors and other players are entering the arena, or they are expanding their investment portfolios in the industry.

Due to these more diverse and varied sources of finance in the market, oil and gas E&P companies are having to spend more time and effort securing funding"

Where are independent E&P companies looking to get financing? How is this different compared to a decade ago?

"Traditional sources of finance are still available, but banks have typically become more risk averse. This makes it more complex to get funding for exploration projects. Funding for existing production is easier to access."

What should these smaller companies be on the lookout for when seeking less traditional forms of investment, such as equity bonds or reserves lending.

"A fully independent Competent Person’s Report from a trusted consultancy firm is still highly valued by financial institutions, private equity funds and other sources of finance. It can make the difference between successfully securing funding or not This third-party reporting is equally applicable to all forms of financing, whether private or public."