Howell Corporation Adjusts Credit Facility with Bank of Montreal

Strategic Insights -

Howell Corporation, a domestic producer of oil and gas based in Houston, Texas, has adjusted its credit facility with Bank of Montreal (BMO) following a redetermination of its borrowing base and the settlement of litigation involving Snyder Oil Corporation and Amoco Production Company. The adjustments include the elimination of a $170 million stand-by commitment, a reduction in the borrowing base under the conforming revolver to $120 million, and an increase in the non-conforming single pay facility to $30 million. The company expects to use the additional capital to reduce its debt and position itself for continued growth, with a focus on exploiting opportunities on newly acquired Wyoming properties.

Key Takeaways:

  • Howell Corporation has adjusted its credit facility with Bank of Montreal after a borrowing base redetermination and the settlement of litigation.
  • The adjustments include the elimination of a $170 million stand-by commitment, a reduction in the borrowing base to $120 million, and an increase in the non-conforming single pay facility to $30 million.
  • The company expects to reduce its debt and position itself for continued growth, with a focus on exploiting opportunities on newly acquired Wyoming properties.
  • Howell Corporation has a growth strategy based on the exploitation of producing properties, measured exploration, and additional strategic acquisitions.
  • The company's asset base consists primarily of onshore, long-lived reserves.
  • The adjustments to the credit facility will allow the company to initiate pilot programs to confirm and prioritize exploitation opportunities on the newly acquired Wyoming properties.
  • Richard K. Hebert, Howell's president and chief operating officer, commented on the constructive relationship between the company and Bank of Montreal, which allowed for the adjustments to reflect current oil and gas prices and the favorable resolution of the litigation.

Statistics:

  • The borrowing base under the conforming revolver was reduced from $130 million to $120 million.
  • The stand-by commitment was eliminated, worth $170 million.
  • The non-conforming single pay facility was increased from $20 million to $30 million.
  • The repayment date for the non-conforming facility was extended to May 30, 1999.

Sources:

  • Business Wire, June 2, 1998
  • Howell Corporation press release.