Partners Jon Iversen and Rick Goldfarb were quoted in a Debtwire article titled “Alaska’s oil & gas tax rebates harness new lending opportunities – Middle Market Memo.” The article discusses how changes in the Alaska tax rebate system for oil and gas companies have incentivized smaller exploration and production (E&P) companies to invest in drilling in the state.
According to Iversen, Alaska Senate Bill 21, signed into law last year, increased from 65% to 85% the capital expenditures covered by the state for drilling conducted in the resource-rich North Slope. Passage of the bill has resulted in a surge of interest among middle market lenders such as Melody Business Finance, which recently finalized a USD 50m tax rebate-backed finance agreement with Rampart Energy, a development-stage E&P company that “…aims to identify new opportunities within mature provinces that have established infrastructure and sophisticated investment environments,” according to its website.
Goldfarb notes a distinction should be made between bank and non-bank lenders, the latter of which are more likely to take on the risk of lending on assets that may not begin to generate revenue for two years or more. “The tax credits will be around indefinitely to entice lenders to backstop deals, but you just won’t see traditional bank lenders on Alaskan development stage [company loans] because in most situations there’s a two-year window between deal announcement and project commencement,” said Goldfarb.
"Alaska's oil & gas tax rebates harness new lending opportunities," was published by DebtWire North America, February 19, 2014.