Energy lenders’ first-quarter 2010 outlook for oil prices indicates that banks are adjusting their forecasts as prices continue to fluctuate, according to a new survey of 43 commercial capital providers.

Front-year oil prices are rising and are now above the $50-per-barrel threshold, as average price expectations rose to $56.41 this quarter, up from $51.29 in December 2009.

Also, the front-month gas-price forecast rose to $4.52 per million Btu, a significant increase from $3.87.

The results are according to global energy investment-banker and M&A advisor Macquarie Tristone’s quarterly “Energy Lender Price Survey” of regional, national and international reserve-based lenders.

The lenders’ five-year trend shows an increasing forward price deck for both oil and gas, with average 2014 forecasts climbing to $64.45 for oil and $5.76 for gas.

“Modest escalation of both oil and gas prices after 2014 is common, but prices are capped at an average of $64.17 and $5.79, respectively,” the firm reports.

The average discount rate used by participating banks is 9%, up from last quarter’s average of 8%. On average, operating costs are escalated 0.6% per year for both oil and gas, down from 0.8% in the previous quarter.

Using a 60/40 blended gas/oil weighting, Macquarie Tristone compared the average base case against Nymex futures as of January 25, 2010. The average base-case results were 74% of Nymex futures in 2010, slightly trending upward to 78% by 2014. This marks an upward trend compared to late 2009, when first-year results were 70% of Nymex futures.

Quarter-to-quarter trends. Compared with the fourth-quarter 2009 survey, the front-year pricing has increased for oil by 10% and has increased for gas substantially, by 17%.

In later years, forecasts for oil prices in the fifth year increase by 3%, and forecasts for gas prices remain the same as the past quarter’s survey, at a 1% increase.

Since the survey began in second-quarter 2005, the participating banks’ oil and gas price decks have continually increased in the extended years from the previous-quarter results.

“The exception has been in the past five quarters,” reports the firm. “Third-quarter 2008 results showed the first quarter-to-quarter decrease, and the first-quarter 2009 results showed a shift from backwardation to contango. This quarter, the contango trend continues, with a steady increase in base-case pricing.”

Sensitivity-case results. The first-quarter 2010 survey also includes a sensitivity case, which represents the lenders’ low or conservative price decks. Of the 43 participating banks, 33 provided a sensitivity case, which averaged a 22% discount to base-case lending policies for both oil and gas over the five-year strip.

The first-quarter 2010 average sensitivity-case oil price is $44.39, for example; for gas, $3.53, according to Macquarie Tristone’s findings.

Reserve-based lending scenario. Using current assumptions, the base-case price decks from the first-quarter 2010 survey were used to calculate a discounted cash flow using PV-9 from the banks’ average. With a 60% advance rate and 20% upside limitation, the amount loaned to a possible acquirer would be about $67 million.

Using the same assumptions, but using the base-case price decks from first-quarter 2009, the amount loaned to a possible acquirer would be about $62 million. The increase in base-case pricing from first-quarter 2009 to first-quarter 2010 results in an 8% increase in advance-rate amounts.

Macquarie Tristone is a global energy advisory firm that provides fully integrated investment banking, acquisitions and divestitures, and global equity-capital-markets services. For more information, contact Logan Magruder at 713-651-4229.

Participants in the third-quarter 2009 survey include Allied Irish Bank, Amegy Bank NA, American National Bank, BancFirst, Bank of Scotland, Bank of Texas, BBVA Compass, BMO Financial Group, BNP Paribas, Calyon, Canadian Western Bank, Capital One NA, CIT Energy, Citibank NA,Citizens Bank, Comerica Bank, Commonwealth Bank of Australia, Community National Bank, Coppermark Bank, Deutsche Bank, DnB NOR Bank ASA, DZ Bank AG, First Interstate Bank, First National Bank of Midland, Frost Bank, IberiaBank, ING Capital LLC, KeyBank, Mizuho Corp. Bank, National Bank of Canada, Natixis, RBC Capital Markets, Regions Bank, Royal Bank of Scotland, SMBC, Societe Generale, Sterling Bank, TD Securities, Texas Capital Bank, Union Bank NA, Wells Fargo, West Texas National Bank and Western National Bank.