What is reserve based financing?

What is reserve based financing?

Reserve based lending is a type of funding in which a loan is obtained with the assistance of undeveloped oil and gas assets. The value of oil and gas reserves determine the quantity of a lending facility accessible to the borrower. A loan is later repaid using the cash generated from sales in the field or portfolio.

What is an RBL lender?

A type of asset-based lending (ABL) commonly used in the oil and gas sector, reserve based loans are made against, and secured by, an oil and gas field or a portfolio of undeveloped or developed and producing oil and gas assets.

How does reserve based lending work?

Reserve-based lending (RBL) is a type of asset-based lending used to finance the operations of independent oil and gas companies. Debt is issued as a factor of reserve value, which is known as the Borrowing Base. Loans are subject to redeterminations of the borrowing base, commonly twice a year.

What does RBL stand for in oil and gas?

RBL – International E&P Financing Tool. • Reserves Based Lending (RBL) began in onshore Texas in the 1970s. • RBL then developed in the UK North Sea in the 1970s and 1980s to finance large North Sea projects. • Enables Oil & Gas producers to Leverage their Balance Sheets to meet planned Capital Expenditures.

What is a reserve base?

The reserve base is the in-place demonstrated (measured plus indicated) resource from which reserves are estimated. The reserve base includes those resources that are currently economic (reserves), marginally economic (marginal reserves), and some of those that are currently subeconomic (subeconomic resources).

What is a borrowing base line of credit?

What is a Borrowing Base? A borrowing base is the amount of money a lender will loan to a company based on the value of the collateral. Lines of credit that rely on a borrowing base are typically made on a percentage of accounts receivable and inventory.

What is an asset based lending facility?

Asset-based lending is the business of loaning money in an agreement that is secured by collateral. An asset-based loan or line of credit may be secured by inventory, accounts receivable, equipment, or other property owned by the borrower. It is also known as asset-based financing.

How much do you get paid for reserves?

Basic Military Pay Chart For Army Reserve Soldiers*

Rank <2 Years 6 Years
Private (E2) $4,201.47 $4,201.47
Private First Class (E3) $4,418.19 $4,980.78
Specialist or Corporal (E4) $4,893.84 $5,940.90
Sergeant (E5) $5,337.36 $6,693.12

How do I calculate how much borrowing I need?

Total up the value of all your assets: inventory, equipment and accounts receivable. This is your collateral amount. To determine your borrowing base, multiply you collateral amount by the percentage at which the bank is willing to loan to you.

How is borrowing base calculated?

Borrowing base is a metric determined by the value of assets you have available to pledge as collateral for a loan. It is equivalent to the maximum loan amount a lender will offer based on a given set of assets. The total asset value is multiplied by the lender’s discount rate to determine the borrowing base.

Is Asset Based Lending good?

Advantages of Asset-based Lending Asset-based loans are easier and quicker to obtain than unsecured loans and lines of credit; Such loans generally include fewer covenants; and. Asset-based loans generally come with a lower interest rate compared to other funding options.