While the Biden administration is pushing for a sweeping transition away from fossil fuels and major banks reduce their exposure to the sector, near-term demand for oil and gas is surging, creating opportunities for lenders such as SouthWest Bank in Odessa, Texas.
The $645 million-asset bank hired commercial lenders Richard Davis Browning II and Wes Webb to launch an oil and gas division, hoping to meet demand that the International Energy Agency forecasts will rise through 2022 and next year. Browning was formerly a portfolio manager at Texas Capital Bank, while Webb joined SouthWest from First Oklahoma Bank, where he was a senior vice president. Both spent several years focused on energy.
“We are so excited to announce the creation of our new oil and gas department and the lenders that will make this department successful,” SouthWest CEO Dewey Bryant said in a press release. “I am confident they will make a positive impact in our markets that will position us well in the years to come.”
Major banks such as Wells Fargo in San Francisco and regional lenders including Prosperity Bancshares in Houston have reduced
A majority of the 11 largest energy lenders — those with more than $100 million in exposure to the sector — cut their exposure further in the first quarter, according to S&P Global Market Intelligence data.
Yet strong demand for oil and gas is fueling price surges that make the financing of new drilling projects solidly profitable, said Jacob Thompson, managing director at Samco Capital Markets in Dallas.
U.S. benchmark oil prices, for example, recently topped $100 per barrel, up about 50% since the start of the year. “Traditionally, with anything over $70 to $75 a barrel, there is a lot of money to be made,” Thompson said.
The U.S. Labor Department said Wednesday that overall energy commodity prices, including oil and gas,
