A survey of 41 energy lenders shows an average base-case West Texas Intermediate oil-price forecast of $47.96 per barrel and Henry Hub gas-price forecast of $6.66 per million Btu. These are among the results of Tristone Capital's fifth "Quarterly Energy Lender Price Survey," a commodity-price poll of both U.S. regional and national energy reserve-based lenders as well as international lenders. "The data provided by participating banks for the second-quarter 2006 survey shows a continual disparity among base-case lending policies, as can be expected with the volatility of today's commodity prices," Tristone Capital reports. "It is important to note that feedback was received from numerous participating banks that it has been more difficult, and a longer process, to compile their second-quarter price decks due to continuing volatility of prices. "With oil breaking the $70-per-barrel threshold, and gas prices rising as well, we believe the third-quarter 2006 report may show a coalescence of energy lenders' belief in higher commodity prices for the long term." Base-case results. The five-year trend shows a backwardated forward price deck for both oil and gas, with average 2010 WTI oil- and Henry Hub gas-price forecasts of $38.15 per barrel and $5.42 per million Btu, respectively. "Modest escalation of both oil and gas prices after 2010 is common, but prices are capped at an average of $38.11 per barrel and $5.40 per million Btu, respectively." The average discount rate used by the participating banks is 9%. Operating costs on average are escalated 1% per year. The median base-case survey results are lower than the mean base-case results due to high-side outliers provided by a few participating banks. "Therefore, it could be argued that the median base case is more representative of typical lending policies than the mean base case," Tristone reports. Using a 60/40 blended gas/oil weighting, the firm compared the average base case against Nymex futures pricing as of April 24, 2006. "When compared with Nymex futures pricing, the average base-case results were 70% of Nymex futures in 2006, gradually trending downward to 60% by 2010." Quarter-to-quarter trends. Compared with the first-quarter 2006 survey, oil prices had moderate increases across the board, and gas had slight increases in the extended years in the base-case price decks being used by the participating banks. The decrease in gas for 2006 may be a pull-back from the high gas prices of last winter, when the Henry Hub gas price on Nymex broke $14 per million Btu. By 2010, increases of 6% and 4% are expected for oil and gas, respectively. The oil and gas base-case price caps have increased from first-quarter to second-quarter 2006 by 4% and 2%, respectively. "Furthermore, since starting the Tristone Capital Energy Lender Price Survey in second-quarter 2005, the participating banks' oil and gas price decks have increased 44% and 31%, respectively, based on 2006 pricing. Consequently, the resulting significant upward borrowing base adjustments throughout the industry would indicate greater access to senior bank debt." In the same period, Nymex oil and gas prices have increased 47% and 22% respectively, the firm adds. Sensitivity-case results. The second-quarter 2006 survey also includes a sensitivity case, which represents lenders' low or conservative price decks. Of the 41 participating banks, 34 provided a sensitivity case, which averaged an 18% and 17% deduction to base-case lending policies for oil and gas, respectively, for 2006. Banks participating in the survey include ABN Amro, Laredo National Bank, Amegy Bank, Macquarie Bank Ltd., American National Bank, Mizuho Corporate Bank, Bank of Montreal, Natexis Banques Populaires, Bank of Texas, National Bank of Canada, Bank of Scotland, RBC Capital Markets, Bank of the West, Regions Bank, BNP Paribas, Royal Bank of Scotland, Calyon-Americas, Scotia Capital, Citizen's Bank, Standard Bank Plc, Comerica Bank, Sterling Bank, Community National Bank, TD Securities, Compass Bank, Texas Capital Bank, Coppermark Bank, Texas State Bank, Deutsche Bank Securities Inc., Union Bank of California, DZ Bank, US Bank, Frost Bank, Wachovia Securities, Guaranty Bank, Wells Fargo, Hibernia National Bank, West Texas National Bank, Key Bank, Western National Bank and Whitney National Bank. The Tristone Capital survey results are published quarterly. For more information, contact Miles Redfield at 832-601-7690.