Not long after Mutual of Omaha Bank launched its oil and gas lending group in 2011, energy veterans George McKean and Edward Fenk spoke to OGFJ about their move to the bank, the formation of the energy lending group, and the bank’s plans in the energy lending space. OGFJ recently caught up with George McKean, Mutual of Omaha Bank’s manager of energy lending. With high oil prices and anticipated long-term demand growth framing the conversation, McKean offered an update on business.
OIL & GAS FINANCIAL JOURNAL:
2012 marked the first full year of service for Mutual of Omaha Bank’s energy lending group. How did the group make its place in the market?
Mutual of Omaha Bank’s Energy Lending Group had a very strong year in 2012, closing 11 transactions totaling more than $150 million in new commitments for first lien senior secured borrowing base credits. As expected, our transactions included a mix of single lender, club and syndicated credits.
Our clients are primarily small, private companies looking to complete acquisitions and develop proved reserves, with several of the companies backed by private equity firms and family funds. Our experienced lending team brings a technical expertise and willingness to dive into the technical analysis that has earned our clients' confidence and trust, proving that we understand their business and are partners in achieving their growth objectives.
Mutual of Omaha Bank's senior management has been very engaged and supportive, particularly with regard to streamlining our bank processes to ensure we are able to meet redetermination timetables. We have demonstrated our ability to be a reliable lending partner, meeting closing and redetermination timetables with borrowing base levels in line with our industry peers. We have developed strategic partnerships with commodity hedge providers in order to allow our clients to mitigate swings in oil and natural gas prices.
Mutual of Omaha's well-known brand has been a significant factor in supporting our growth and differentiating Mutual of Omaha Bank from our competition in the energy space. Some of our marketing activities included our sponsorship of the EnerCom conference in Denver and our participation at NAPE. At both conferences, the Mutual of Omaha Bank booth featured classic episodes of Mutual of Omaha's Wild Kingdom, which attracted many visitors who have fond memories of watching the popular television show.
The breadth and strength of Mutual of Omaha Bank's product portfolio also has differentiated our bank in the market. Beyond energy and commercial lending, we've worked with clients to provide treasury management services at a lower cost than many of our competitors, as well as wealth management and mortgage lending solutions to meet our clients' needs.
How do you see the oil and gas market shaping up in 2013 and what is in store for the Mutual of Omaha Bank energy lending group?
We expect a nice climate for 2013. We expect to continue developing new energy relationships and working to meet our clients' growth objectives by adding lending partners to support increases in their borrowing base facilities for drilling and acquisition activity. From an activity perspective, we expect to remain strong in 2013 with transactions near the $135 million range.
We expect the financing market to remain strong in 2013 as continued strong oil prices and stabilized natural gas prices support continued acquisition and development activity. The energy lending market remains very active with many experienced lenders. Energy has become a core part of the bank and Houston being at the center of the energy world, is becoming one of the bank’s highest performing markets.
While we expect a steady influx of new entrants into the market, we will continue to leverage our technical and financial experience, along with the strength of the Mutual of Omaha brand, to give Mutual of Omaha Bank a competitive advantage.