Oil & Gas Financing: What All The Experts Agree Works Best

One of the toughest categories to get funds for is financing the extraction of in-ground assets. What are in-ground assets? We’re talking about oil & gas. Also mining projects of all types. Whether it’s coal, copper, iron, gypsum or any other mineral that has to be taken out of the ground.

Why is it so hard to get funds for these extraction activities? Because the risk of failure is historically very high. Even so, if you have a plan that makes fiscal sense, when you put the right information in front of the right lender or investor, you can get the cash you need. You can get debt and/or equity financing. You can even get joint venture partners.

The information you need to provide is not so different than what’s required for financing of other types of projects. You’ll need a clear business plan and financial model so the lender or investor can see your vision. Be sure to provide a thorough description of the market, its history and upside potential.

One of the most important documents that will absolutely be necessary is a recent 3rd party reserve report that provides a clearly stated estimate of the recoverable mineral reserves available. Many times we see reserve reports prepared by individuals that are members of the development team. This will NOT work as these reports will certainly be viewed as a conflict of interest. An independent 3rd party that has no other ties to the borrower/developer must be used to develop it.

Provide detailed resumes on the management team that proves you have the experience, background and ability to successfully manage and operate such an endeavor. Prepare a detailed schedule of the permits and licenses required to begin construction and/or operation with realistic timelines needed to obtain any you don not already have.

If you are already operating and generating revenue, be sure to give them copies of your last 5 years of financial statements and balance sheets. If you’re a start-up, it will be more difficult, but still very possible to get funded.

There are far fewer lenders and investors that will fund the extraction of in-ground assets than there are for other types of projects.

If you need help, ask us for it. Visit us tomorrow for another free commercial loan secret and be sure to subscribe to our RSS feed.

You can also contact us to ask questions and voice your concerns. Just pick up the phone and dial, CFIC Funding, Inc. today at 310-421-7370! Ask for David Young or Wayne Clinton. You can also visit http://www.cficfunding.com or mail david@cficfunding.com or wayne@cficfunding.com