The oil & gas sector is capital intensive. Oil & gas companies require significant funds to finance their operations which may include, in the case of:

To finance their activities, oil & gas companies may use a variety of lending sources and structures, including:

RBLs, which are a type of asset-based loan where the amount the borrower is entitled to borrow is based on the value of its oil & gas reserves, as determined from time to time, have historically been the most common source of capital for upstream E&P companies. However, other sources may be used, especially for companies whose oil & gas assets are more in the development or exploratory stage.

However, as the lending environment continues to evolve and some banks are tightening their lending requirements, some producers have started shifting away from the RBL structure in favor of securitizations and other financing structures.

This Toolkit highlights Practical Law lending resources oil & gas upstream and midstream companies may use to finance their operations. For a general introduction to the oil & gas sector, as well as information on the upstream and midstream segments in particular, see Practice Note, US Oil & Gas Industry: Overview. For information on non-lending sources of capital, including private equity, cash on hand, and farmouts, see Practice Note, Upstream Oil & Gas Sources of Capital: Alternatives to RBLs.

Depending on their needs and operations, midstream companies may finance their projects (whether oil or gas pipelines, liquefied natural gas (LNG) facilities, refineries, and other facilities) using a wide range of financing structures, including corporate loans, limited recourse financing, and high-yield debt.