Nuevo Energy Company Increases Borrowing Base to $380 Million

Strategic Insights -

Nuevo Energy Company, a leading oil and gas producer in California, has successfully increased its borrowing base to $380 million, effective immediately. The commercial banks, led by NationsBank and Morgan Guaranty Trust Company, have approved this increase after conducting an annual appraisal of the company's domestic oil and gas reserves. The $50 million increase is attributed to the growth in proved reserves during 1997, which more than offset the reduction in assumed future oil prices.

Key Takeaways:

  • Nuevo Energy Company's borrowing base has been increased from $330 million to $380 million, effective immediately.
  • The increase was approved by a group of thirteen U.S. and foreign-based banks, led by NationsBank and Morgan Guaranty Trust Company.
  • The $50 million increase is a result of the company's growth in proved reserves during 1997, which more than offset the reduction in assumed future oil prices.
  • The company's Chairman and CEO, Doug Foshee, attributes the increase in borrowing capacity to a vote of confidence in the quality of its asset base and its long-term value.
  • The $400 million senior revolving credit facility is committed through April 1, 2003, and is unsecured with a priority in right of payment over the company's $160 million of 9.5% senior subordinated notes due April 15, 2006.
  • At March 31, 1998, there was $160 million outstanding under the senior bank facility.
  • Nuevo Energy Company is a Houston, Texas-based company primarily engaged in the exploration, acquisition, exploitation, development, and production of crude oil and natural gas.

Statistics:

  • $380 million: Nuevo Energy Company's new borrowing base.
  • $330 million: Previous borrowing base.
  • $50 million: Increase in borrowing base due to growth in proved reserves.
  • 13 banks: Number of U.S. and foreign-based commercial banks involved in approving the increase.
  • $400 million: Total senior revolving credit facility committed through April 1, 2003.
  • $160 million: Outstanding balance under the senior bank facility at March 31, 1998.
  • 9.5%: Interest rate on Nuevo Energy Company's senior subordinated notes due April 15, 2006.

Sources:

  • Nuevo Energy Company.
  • PRNewswire.