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Mitigating the Potential Impact of COVID-19 and a Crude Oil Price Collapse on Wyoming’s Energy-Centric Economy Through Actionable Investment Strategies Available to the State

Open Water Capital Partners has published a study entitled Mitigating the Potential Impact of COVID-19 and a Crude Oil Price Collapse on Wyoming’s Energy-Centric Economy Through Actionable Investment Strategies Available to the State. 

In their study, Open Water Capital Partners highlights solutions to mitigate the long-term effects of a sustained downturn in coal, oil and natural gas and introduces strategies to limit the downturn’s impact while supporting Wyoming’s energy industry.

Open Water Capital Partners introduce strategies to curtail this impact to Wyoming’s economy with a three-pronged approach providing “immediate financial relief to operators, access to longer term liquidity amidst the volatility, and establishes a platform to more broadly diversify state revenue streams. This paper advocates the use of existing legislative authority to prosecute the following three programs:

  1. Amend Chapter 3, Sec 16 of the Wyoming Oil & Gas Conservation Commission Rules to extend the permitted allowable idle well period, defer idle well bonding requirements for wells shut in as a result the current oil price collapse, and defer required mechanical integrity testing on idle wells.
  2. As permitted by the State’s Master Investment Policy, deploy the 5% Opportunistic Allocation of the Permanent Wyoming Mineral Trust Fund to acquire distressed credit positions of Wyoming oil and gas producers and restructure those loans with more flexible terms.
  3. As permitted under Article 16, Sec 12 of the Wyoming State Constitution, utilize the Authorized Revolving Economic Development Loan program alongside the Permanent Wyoming Mineral Trust Fund Opportunistic Investment allocation to inject senior liquidity to oil and gas producers by extending new credit lines and backstopping existing loans.”

Open Water Capital Partners explains “Wyoming has access to a quiver of powerful financial tools to manage through this cycle. By employing a proactive and thoughtful investment approach, the state could use the tools at hand to provide nearly $500 million of liquidity to the energy sector; all the while protecting jobs, generating new sources of revenue, and furthering the diversification of revenue sources.”

Read the full study here