05:39
Faizan
What do Texas, Colorado, Oklahoma, West Virginia, Wyoming and North Dakota have in common? They were all recently cited as six of the top 10 fastest growing states in the country and all of them can name domestic oil and/or natural gas production as a component of their success. These states join Alaska and California in fueling our country. "Increased oil and gas supplies will bring an economic renaissance to the United States," petroleum economist Philip Verleger declared recently. "Energy independence, once thought unrealistic, will be achieved."
Domestic energy production is making a significant impact on the nation's economy and there is an increased demand for accounts receivable financing. The need for ancillary services such as water haulers, frac sand haulers, roustabouts, vacuum trucks, environmental clean up, excavating / dirt work, tank cleaners, pressure washing, component manufacturers, inspection services, flowback testing, gravel pit suppliers and rig movers has created an additional layer of economic opportunity. These support companies are experiencing the same growth pressure as the energy producers themselves. Entrepreneurs are finding themselves in a position to manage quickly expanding financial needs. Prosperity makes demands beyond their technical expertise. As a result, these entrepreneurs may need to reach out to their own support sources in order to remain viable in a rapidly increasing economy.
Traditionally, such growth rates create a need for working capital as businesses expand rapidly. This economic recovery will be unlike those of the past as banks are under greater scrutiny and are more averse to risky lending. In theory, banks should limit the risk as they are lending their depositors' and shareholders' funds. Cash flow financing for domestic energy will most likely need to come from asset based financing. Thus, it will become more common for burgeoning oil and natural gas producers to borrow directly against their accounts receivable in order to fuel continued production. This form of funding is appropriate as we move more toward a manufacturing and commodity based economy versus a service economy.
Domestic energy production is making a significant impact on the nation's economy and there is an increased demand for accounts receivable financing. The need for ancillary services such as water haulers, frac sand haulers, roustabouts, vacuum trucks, environmental clean up, excavating / dirt work, tank cleaners, pressure washing, component manufacturers, inspection services, flowback testing, gravel pit suppliers and rig movers has created an additional layer of economic opportunity. These support companies are experiencing the same growth pressure as the energy producers themselves. Entrepreneurs are finding themselves in a position to manage quickly expanding financial needs. Prosperity makes demands beyond their technical expertise. As a result, these entrepreneurs may need to reach out to their own support sources in order to remain viable in a rapidly increasing economy.
Traditionally, such growth rates create a need for working capital as businesses expand rapidly. This economic recovery will be unlike those of the past as banks are under greater scrutiny and are more averse to risky lending. In theory, banks should limit the risk as they are lending their depositors' and shareholders' funds. Cash flow financing for domestic energy will most likely need to come from asset based financing. Thus, it will become more common for burgeoning oil and natural gas producers to borrow directly against their accounts receivable in order to fuel continued production. This form of funding is appropriate as we move more toward a manufacturing and commodity based economy versus a service economy.
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