Seasoned commercial energy lenders and well-respected newcomers are still keeping in step with an E&P industry that refuses to slow down. But high commodity prices and producers' inclination to keep cash in the coffers have created a mighty high hurdle for the energy-banking group to get over. The hunt is for prospects, not funding, and the energy lenders bent on growth are realizing that a hefty bag of E&P capital is no longer a unique lure for producers. As one energy executive put it, a creative energy-company management team will "find strategic partners that can do more than just bring the money." Not to be left in the dust, many commercial lenders have responded to producers' desire for more lending diversity. To avoid slumps in loan demand, energy bankers are increasing their portfolio of lending vehicles, preparing to originate more upstream transactions, hiring teams that know the E&P industry and beefing up their customer service with every client they work with, no matter how small the deal is. Three banks that have put these approaches to work are Germany-based WestLB AG in Houston, the Houston-based lending group of DZ Bank and San Francisco-based Bank of the West in Denver. WestLB AG Bank The energy practice of one of Germany's largest commercial banks, WestLB AG, has been in full swing since the inception of the bank's Houston office in 1987, although it has originated upstream deals and participated in syndication groups since 1976. Ron Ormand, managing director and head of the North American oil and gas group, says, "Philosophically, we want to be a 'full capital provider and advisor to our clients,' meaning we'll provide capital on the right side of the balance sheet from debt, mezzanine and equity funding. But we'll also support clients with other services, including advisory, capital markets and commodity hedging. "We do not lead any transactions where we don't put our own capital to work, and we don't act just as an agent-we act as principal and agent in everything we do. That's a bit of a distinction between some of the investment banks that don't want to have capital on the balance sheet."