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Oil Drillers Feel the Pain as Banks Slash Their Credit Lines

  • Banks cutting lending as crude price stays near $40 a barrel
  • Lenders block troubled energy companies from borrowing more
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Banks Get Strict on Oil Patch Borrowing

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Chesapeake Energy Corp., the deeply indebted shale producer, said this week that it can hang on to its $4 billion bank line as long as it posts just about everything it owns as collateral.

Many of its competitors are faring far worse. Almost two years into the worst oil bust in a generation, lenders including JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. are slashing credit lines for struggling energy companies. It’s a tacit acknowledgment that energy prices aren’t coming back, and represents an abrupt turnaround from last year when banks were lenient on struggling drillers in the hope that better times were coming.