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Industry Focus

Energy: The Day Oil Producers Fear the Most is Approaching Fast

Industry Focus

The Motley Fool

Interview, Money, Consumergoods, Business, Businessnews, Ceo, Technology, Investing, Stocks, Energy, Fool, Financial, Economy, Healthcare, News, Banking, Motley, Tech, Business News, Investments

4.6854 Ratings

🗓️ 24 September 2015

⏱️ 18 minutes

🧾️ Download transcript

Summary

Pretty soon, oil producers will need to show bankers that they are still worthy of borrowing money. So our energy guys take a look at what this could mean for companies. Plus, another mailbag question and Big Oil is turning into Big Renewables?

Transcript

Click on a timestamp to play from that location

0:00.0

Big Oil is investing in renewable energy on this energy edition of Industry Focus.

0:07.0

Greetings fools, I am Sean O'Reilly joining you here from Fool Headquarters in Alexandria, Virginia.

0:16.0

It is Thursday, September 24, 2015, and here are the men, the myth, the legends, Tyler Crow, and

0:21.3

Taylor Mukerman.

0:22.3

How's it going, guys? It's tough to be all three.

0:24.1

Yeah, it's is one of us like the man the other ones the myth and the legend like how or that are they

0:29.1

evenly distributed? I'm not going to hurt the other ones feelings by saying which one of you has all these

0:36.2

characters.

0:37.2

We've got lots to talk about today, a mail back question and renewable energy investments

0:42.0

being made by big oil.

0:43.0

But first I've been dying to talk about the possibility that the day of reckoning for oil producers is just around the bend.

0:48.0

Tyler, what do we mean when we say the day of reckoning is coming?

0:52.0

That sounds very scary.

0:53.4

Yeah, so maybe a little hyperbolic when we use, or terms like that,

0:58.7

or a little hyperbole there.

0:59.8

But basically what is going to happen in the next couple of weeks is lenders to the oil and

1:06.4

gas producers in the United States and around the world actually are going to re-evaluate

1:11.6

credit lines, how much these companies can borrow on a short-term financing

1:16.8

deal based on their reserves, their production, and all those things.

1:21.8

And one of the big determinants of that lending capacity is oil prices and with

1:29.1

oil prices continuing to fall we could see a major cut in the amount of money these companies can borrow

1:37.0

on those what we call credit facilities. And if those are cut lower than what companies have taken out on those credit facilities,

...

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