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In the heart of West Texas and southeastern New Mexico, the Permian Basin isn’t just oil-country. It’s banking country too. Here, financial institutions don’t simply lend, they live the energy business, and they know that raising the next generation of bankers and customers means understanding not just the latest in banking, but also the next generation of energy technology, policy, and especially energy finance. Being not just intertwined with the energy sector, but living it, is how bankers and financiers understand that money must flow like the oil. In this part of the world, relationships matter more than almost anything. Oil and finance mix as well as an operator and a banker standing side by side at Shack in the Back (a favored Permian watering hole), having a few drinks, discussing their kids’ baseball practice, the trends in the petroleum industry, and ideas on how we can all help each other thrive.
From Pickup Trucks to Production Platforms
Banking in the Permian spans more than just marbled lobbies and crystal chandeliers at the boardroom of a major E&P company. It reaches the guy in a service truck and the tooling company with 30 employees, as well as the field personnel at a multi-billion-dollar reservoir play in the Delaware Basin. Banking as traditionally envisioned has moved online, where now anyone can deposit a check through their mobile phone from the middle of Orla while at a frac location. Tools that help the entire range of financial needs are available, depending on your size and requirements.
Thavi Rath
Take the small independents: the owner/operator with a single service rig or pipeline-risers crew. They might not qualify for a conventional oil-and-gas large-scale loan or wish to take on debt tied to reserves. That’s where specialized finance steps in. As one industry leader in factoring explains:
“We provide the financing and options that a small independent owner/operator may not qualify for at a bank… we are a handshake business, we know our clients.” —Riviera Finance, Thavi Rath
In one standout case study, a day-laborer turned shed-builder launched his business inside the very sheds he built for pipeline risers. As work picked up, outstanding invoices piled up, and cash-flow stretched. Riviera Finance purchased his receivables, freeing up operating capital. He hired crews, delivered more sheds, and ultimately retired a wealthy man, all because someone trusted his work and understood the niche business. This kind of tailored finance solution isn’t typical everywhere, but in the Permian, it’s standard.
Move up the scale: A mid-sized service company might need receivables management, business intelligence on their customers, or strategic factoring rather than a traditional loan.
“We offer strategic services such as business intelligence—running credit on your customer, back-end account receivables for smaller shops, using factoring strategically to free up cash-flow… or even make payroll if things are tight one month.” —Riviera Finance, Jason Smith
At the top of the vertical: major exploration and production companies, surface-processing firms, and large service platforms. Here the banks talk about reserves-based lending, capital markets, and energy-specific risk models. When the stakes get higher, so does the range of financial products and options to move from one scenario as the business develops.
“With the latest acquisition this year, we are a ‘sleeping giant’ as the largest commercial bank in the Permian.” — UMB Financial Corporation (via Beau Whatley)
“We understand the energy business and the culture of the Permian Basin. We have a petroleum engineer on staff… we manage risk through our Reserves Based Lending Group… we are ‘cautiously optimistic’ in the near term, but bullish on the overall future of the sector.” —Beau Whatley
The point: In the Permian, there are tiers of banking and financial services all along the vertical, not unlike a separator where different products fall out at different levels. It is the same with finance in the energy industry. Independent owner/operators. Small and medium-sized service companies. Larger corporations with complex capital structures. Each needs different tools, strategies, solutions, and the institutional partners that can speak their language.
Energy Culture and Relationship Banking
Jason Smith
What sets banking in the Permian apart is not just the size of deals, but the talent, the culture, and the relationships. A conversation with Permian Basin Finance and Energy Leader Jonna D. Smoot reveals the deep commitments and relationships in these areas. “If your banker doesn’t know your name, you probably need a new banker.” Of course, having a financial partner who not only knows you but understands your business is critical. But just as the energy industry never rests on its laurels, neither does her capital partners. Jonna observes: “An overall trend in the Permian is the move towards more highly equipped staff and personnel who are trained specifically to serve the energy industry.” And while this is important to today, the future is where she sets her sights: “There is a dedication in the Permian not only to bring up the next generation of bankers, but also the next generation of businesses and clients to help fuel the country.” It is fortunate that the super critical work of this industry is matched by forward-looking partners.
In the Permian, being a banker means learning geology-adjacent terms, drilling economics, rig-count cycles, and frac-crew logistics. One unique aspect of UMB is they have petroleum engineers, energy-credit specialists, and risk groups dedicated to reserves-based lending. The region’s financial culture is deeply relational: bankers attend rig breaks, shindigs, and local charity events, and they know the independent owner-operator by first name. That trust pays dividends when the rig count drops or the price war hits: the relationships built in the boom years carry through the bust.
For example, according to the latest economic indicators from the Federal Reserve Bank of Dallas, in the first quarter of 2025, non-farm employment in the Midland–Odessa region rose 2.9 percent (versus 1.0 percent U.S.), while oil production held steady at roughly 6.4 million barrels per day. When the region is humming, its banks are also humming—but they stay plugged into the local business ecosystem, not just passively watching, and anticipating the next challenge to the Permian’s overall business model.
Tiered Banking and Strategic Services
Let’s zoom in on the three tiers of the financial ecosystem in the Permian.
- Independents and Owner/Operators
These businesses might operate one service rig, build skid-units, haul equipment, or manage pipeline construction or instrument installation. In other words, not always fitting neatly into standard commercial-bank lending. That’s where invoice factoring, receivables financing, and flexible working-capital tools come in. A concise recap: Invoice factoring is defined as the practice of a company selling its outstanding invoices (accounts receivable) to a third-party (factor) at a small discount in exchange for immediate cash. This helps lock up cash flow, make payroll, purchase materials, and create scale without adding long-term debt. In the Permian, service businesses lean on these tools as lifelines when rig count or demand swings.
- Mid-Sized Service Firms
These companies may handle dozens or hundreds of employees, contract with multiple operators, and navigate growth cycles. They may need credit lines secured by equipment, receivables management or insights into customer credit risk. Riviera’s Jason Smith highlighted how factoring can be used strategically—not just for cash‐flow rescue, but to free up capital, invest in fleets, hire talent, and avoid traditional debt burdens.
- Large Corporates and Energy Finance
When you’re talking about tens or hundreds of millions in production platforms, the bank conversation changes. It enters reserves-based lending, syndicated credit facilities, hedging, and long-term capital deployment. UMB’s Beau Whatley clearly recognized the advantage of being “largest commercial bank in the Permian” and of having a risk group with energy domain expertise. Banks that set themselves up with the right people—petroleum engineers, credit analysts versed in geological risk, nonprofit trust groups focused on energy transitions—gain an edge.
Why the Permian is a Step Ahead
Beau Whatley
There’s a reason why the Permian region’s banks are ahead of counterparts elsewhere: they understand value of flow. Just as oil must flow through pipelines and rigs, money must flow through companies and communities. Banks that can keep capital moving, even when the cycle dips, will thrive.
The region’s economic backdrop supports this: for example, the Dallas Fed indicates the rig count in the Permian remains deeply connected to output growth and drilling productivity. Community banks in West Texas likewise embed themselves in the local ecosystem—one report noted there are approximately 30 banks with assets between $250 million and $2 billion in West Texas alone. That’s a lot of banking infrastructure built for local relationships.
By knowing their clients, not just as companies, but as people, family, friends, and neighbors, these banks and financial service firms earn something intangible: trust. It might look like a local banker walking a frac pad at midnight or dipping into the sidelines at a local oil-field clay shoot or golf charity tournament. That cultural alignment helps during downturns; when times are good you may have many choices, but when things tighten you want a partner who knows your name, your town, your business.
The Future of Banking in the Permian Basin
So, what’s next? A few signals stand out:
* The talent pipeline. Banking in the Permian isn’t resting on “we used to know oil.” Firms are training the next generation of bankers and clients. As Jonna D. Smoot said: “There is a dedication… to bring up the next generation of bankers, but also the next generation of businesses and clients to help fuel the country.”
* Technology and transition finance. As the oil-and-gas sector evolves (electrification, water-handling, carbon capture) the next wave of bankable projects will need financiers who understand both drilling and decarbonization.
* Risk management. With commodity cycles still part of the Permian DNA, banks remain cautiously optimistic. UMB’s “cautiously optimistic… but bullish” phrase echoes that. The difference here is preparedness: they’ve built specialist teams and credit tools for the worst as well as the best.
* Success across scale. From the owner-operator buying a service pickup, to mid-tier firms upgrading rigs, to multibillion-dollar production plays—the financial ecosystem in the Permian is layered and interconnected. Having the right partner at each level is key.
In Banking, as in Oil—Keep the Energy Flowing
At its core, banking in the Permian is built on the same principle that drives the oil business: energy flows. Capital flows. Trust flows. Time zones, rig counts, and pump-jack rhythms may change, but the best bankers here know the landscape—literally and figuratively. They know the pickup in the yard, the crew on the pad, the owner’s name and ambition. They’re not just lenders; they’re partners in the business of energy.
If you’re an independent, a service firm, or a major operator, ask yourself: Does my banker know my business? Does my financial partner understand the energy cycle, the region, the culture? If the answer is ‘no,’ it might be time to find someone who does.
Because in the Permian Basin, banking isn’t just about money—it’s about momentum.
Sources:
1: https://www.dallasfed.org/research/indicators/pb/2025/pb2501
2: https://www.dallasfed.org/research/energy11/permian
3: https://www.pnc.com/content/dam/pnc-thought-leadership/PDF/cib/Flying-Under-the-Radar-Texas-Small-and-Micro-Cap-Banks.pdf
Christian Lombardini
Christian Lombardini, a former field operator and manager, is now a communications and content consultant for oil and gas companies and creators. You can find Christian and his The Oilfield Leader Podcast on LinkedIn.
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