In December 2022, Production Lending closed and funded a $2,500,000 loan to a private, Louisiana-based oil and gas company. Proceeds from the loan were used to fund several AFE’s of horizontal natural gas wells that the company had participated in.
The borrower is a minerals-focused firm that acquires mineral acreage and non-operated working interest in the Haynesville shale play. Production Lending’s investment has allowed the company to participate in the development of more horizontal wells without the need to sell equity or give away upside in the projects. The loan was structured to provide the company with flexibility around principal payments, additional development proceeds and early prepayment of the facility.
Given the heavy development component of the transaction, the loan was also structured with an initial LTV of greater than 100% of the PDP PV-10, which will be reduced below 50% once the development wells come online.
Production Lending is a Houston, TX based firm focused on secured debt investment opportunities in small, private, US-onshore oil and gas companies. It is owned and run by two former energy bankers, Abhishek Kumar and Ryan Childs, who have underwritten financing transactions worth more than $60 billion over their careers. Their business specializes in providing growth and acquisition financing in the form of short-term bridge capital and longer tenor debt and preferred equity investments throughout United States.
Since August 2016, Production Lending has funded 31 debt transactions for a total capital commitment of more than $125 million, along with an additional 12 preferred equity transactions worth more than $15 million. The firm specializes in providing growth and acquisition financing in the form of short-term bridge capital, longer tenor debt and preferred equity investments throughout the U.S. More information about Production Lending can be found at www.productionlending.com.