Credit Evaluation School Instructor eBook - Oct 2023

Internal Use Only

Wayne, Bruce – Pass • Wayne’s specialty is buying nonproducing oil wells and reworking them so that they are producing. This has proven to be successful. • Originally in the third lien position; however, with the recent increase in oil prices, the first and second lienholders were paid off, so this bank is now in the first lien position. No assets were sold. Payoffs came from increased oil revenue. People: Investor specializing in buying non producing oil wells and reworking them into productive wells. Purpose: Line of credit for investment purposes – purchase of nonproducing oil wells and reworking into producing well. Payment: Interest only payments required monthly. Paid via cash flow from the oil wells and personal investments. Protection: Third lien on mineral rights – oil well. First and second lienholders recently paid off, improving bank to first lien position. Performance: Satisfactory. Never over 60 days. Was 53 days past due as of exam date, but has since been brought current via oil revenue.