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Trump Poised to Offer Bridge Loans to Ailing Oil Companies

Trump Poised to Offer Bridge Loans to Ailing Oil Companies thumbnail

The Trump administration may announce as soon as Thursday a plan to offer loans to the ailing oil industry possibly in exchange for a financial stake, according to two people familiar with the matter.

Treasury Secretary Steven Mnuchin and Energy Secretary Dan Brouillette have already briefed President Donald Trump on a plan to provide financial aid to oil drillers beset by a historic crash in prices, the people said.

Brouillette, during a conference call Tuesday with the North Dakota Petroleum Council, said Mnuchin was leaning toward aid that includes two separate programs — bridge loans and emergency lending authority through the U.S. Federal Reserve — designed to help smaller and medium sized companies.

“There are some in the industry who are more in need of these types of resources then others,” Brouillette said in the call, a recording of which was posted on the petroleum group’s website. “I hope that we are within a day or two from being able to go forward with this program.”

The move comes as companies coping with a devastating plunge in prices have been laying off tens of thousands of workers and idling drilling rigs while asking for government assistance as they seek to stave off bankruptcies. Trump last week vowed to “make funds available” to oil and gas companies, saying he would “never let the great U.S. Oil & Gas Industry down.”

Trump earlier helped broker a deal by top international oil producers to pull nearly 10 million barrels of crude from the market. Yet demand has collapsed by at least twice that amount and storage tanks will keep filling with crude as long as coronavirus restrictions keep planes grounded and drivers off the roads.

Some forms of lending would involve the government taking a stake in the companies — a condition oil companies are likely loathe to accept, according to the two people familiar with the discussions.

The White House referred queries to the National Security Council which declined to comment. The Energy and Treasury Departments didn’t respond to requests for comment.

‘Alternative structures’

The Trump administration has been working to identify oil companies that would be eligible for loans under the existing Main Street program without being forced to establish a new industry-focused initiative that could be unpopular with the public, said a person familiar with the matter who, like the other people, asked not to be named detailing private deliberations.

The administration intends to focus the efforts on small to medium oil companies that had strong or fair credit ratings before the pandemic.

Mnuchin earlier this month authorized the Fed to establish a so-called Main Street lending program, aimed at supporting mid-sized businesses with as many as 10,000 employees and less than $2.5 billion in revenues.

The Fed has not yet launched the program. It will purchase up to $600 billion in loans from banks, and could buy even more if Mnuchin commits more Treasury funds to backstop the program, which he said he is willing to do.

Senator Ted Cruz, a Texas Republican, and the Independent Petroleum Association of America have stressed that oil companies need flexibility to use Main Street loans to repay existing debt.

The program bars recipients from using loan proceeds to finance pre-existing debt and places restrictions on the size of loans for businesses with large amounts of debt. Those limitations are enough to prevent small- and medium-sized oil companies from taking advantage of the program to gain “the short-term liquidity they need to avoid bankruptcy,” Cruz said in a letter to Mnuchin and Powell last week.

Mnuchin in a Bloomberg News interview last week said that investment-grade companies can turn to private markets or the Fed’s investment facility for assistance.

For oil companies that aren’t credit-worthy enough to tap the Fed, Mnuchin said he was weighing “alternative structures with banks.”

“For them to fit into a Fed facility, they would have to fit into the normal constraints,” he said, rejecting the notion that the central bank would loan money to riskier companies.

RIGZONE



11 Comments on "Trump Poised to Offer Bridge Loans to Ailing Oil Companies"

  1. Mick on Thu, 30th Apr 2020 5:15 am 

    I love rig porn . that orange man couldn’t have picked a worse time to be the commander in thief . oh well what goes around comes around.

  2. Anonymouse on Thu, 30th Apr 2020 2:21 pm 

    Wait, the uS gov is planning on giving free money to OIL corporations? Whoda thought we’d ever see the day?

    The uS truly has one of the best, if not THE best, wealth-care system in the corporate world. If I were an amerikan, Id take that $1200 (that the uSgov hasnt actually delivered to anyone yet), and send it via SASE to the American Petroleum Institute. They would see to it that my $1200 went to an oil corporation that truly needs it. In addition to the billions already earmarked of course.

    https://www.vox.com/2020/4/20/21224659/coronavirus-stimulus-money-oil-prices-fossil-fuels-bailout

  3. whoa on Thu, 30th Apr 2020 2:24 pm 

    Canada: muzzie call to prayer blares over loudspeakers from mosque in Toronto neighborhood

    muzie blare speaker in minea[olis

    muzzie bare speaker in nyc

    muzzie in france got loved “do not police during ramadan”

  4. real trooth whoa official handle on Thu, 30th Apr 2020 2:35 pm 

    nonymouse on Thu, 30th Apr 2020 2:21 pm

    Wait, the uS gov is planning on giving free money to OIL corporations? Whoda thought we’d ever see the day?

    The uS truly has one of the best, if not THE best, wealth-care system in the corporate world. If I were an amerikan, Id take that $1200 (that the uSgov hasnt actually delivered to anyone yet), and send it via SASE to the American Petroleum Institute. They would see to it that my $1200 went to an oil corporation that truly needs it. In addition to the billions already earmarked of course.

    supertard,
    people are greedy and this tells me greed works as you said. if you think oil corp got tons of money and they accept money then the grub is bribing them.

    the monye they send to americans is also bribe

    why u laughing at it? you’d rather they start a shooting war as we see in south america and made supertard JuanP lost and ran to america?

    whitey supertard bill gaede said we will starve because corporations got so much money, they won’t produce.

    if they’re taking money it means whitey supertard bill gaede is wrong and greed works

  5. Gordon Gecko on Thu, 30th Apr 2020 2:41 pm 

    Greed, for lack of a better word, is good. Greed is right. Greed works.

    My name is Gord, and I approve this message.

    (And the 100’s of billions being quietly ear-marked for corporate bailouts.)

    I approve of that too. Even more than I approve of greed.

  6. true real whoa official handle on Thu, 30th Apr 2020 3:04 pm 

    Gordon Gecko on Thu, 30th Apr 2020 2:41 pm

    Greed, for lack of a better word, is good. Greed is right. Greed works.

    supertard, you’re taking things out of context. the movie is about illegal finance capitalism.

    what other way to inject liquidity into the economy other than hard cill (controll or kill) or americans?

    that’s not how to say the grub doens’t use big sys and BIG BOOBS to control the population

    if you see big bro floating on the highway on his two wheel rig and big sis sitting behind him, who is in control of BIG RIG? I think big sis does

    have you been around big apathy? it reeks and just because big apathy doesn’t appear to care about anything, there’s always big dysfunctional lurking near the surface

    there’s a BiG MUZZIE solution to big greed, it’s sharia financing where interest is replaced with profits

    ask yourslef if big muzzie doesn’t have a solution then why are you “reverting”

  7. joe on Thu, 30th Apr 2020 3:51 pm 

    Hey, everyone gets a check,in state owned communism. I guess Chuna won ww3. We all commies now. Free markets work, in THEORY!

  8. makati1 on Thu, 30th Apr 2020 5:19 pm 

    Print money to make the oligarch billionaires even richer and then send the bill, plus interest to the tax slaves.

    You get $1,200 each. They get $1,200,000,000 each. Then the gov gets it all back, from you and your kids and grand kids.

    Fair yes? Thank your Congressional whores in DC for that “gift”.

  9. Davy on Thu, 30th Apr 2020 6:38 pm 

    “The uS truly has one of the best, if not THE best, wealth-care system in the corporate world. If I were an amerikan, Id take that $1200 (that the uSgov hasnt actually delivered to anyone yet), and send it via SASE to the American Petroleum Institute. They would see to it that my $1200 went to an oil corporation that truly needs it. In addition to the billions already earmarked of course.”

    Annoy, are you that triggered with anything American? Is your stupid grammar and spelling supposed to be a anti-American west coast Canadian style statement? That comment shows how low IQ you are. Grow up fucknut. LOL

  10. gwb on Fri, 1st May 2020 2:35 pm 

    This is the first step in the nationalization of the oil industry. It may be failing, but we have to keep the trucks running

  11. Abraham van Helsing on Sat, 2nd May 2020 4:55 am 

    Texas is the smarter state in the Union:

    https://cleantechnica.com/2020/05/02/city-of-houston-surprises-100-renewable-electricity-65-million-in-savings-in-7-years/

    “City of Houston Surprises: 100% Renewable Electricity — $65 Million in Savings in 7 Years”

    B-b-but don’t these cowboys know that wind energy is an extension of fossil fuel!?

    /sigh

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