Plummeting oil and gas prices are causing major shifts in the market for oil and gas project financing. The fluctuating nature of oil & gas collateral is creating a whole new world of lending risk. While Article 9 security interests will continue to be part of financing packages, lenders need to be even more careful when documenting and perfecting security interests and also ready to meet the challenges of default. The nuts and bolts rules governing loan transactions secured by oil & gas collateral are found in Article 9 of the Uniform Commercial Code. Article 9's oil and gas provisions have never been more relevant throughout the life of the transaction.

Now is the time for lenders to do their due diligence by reviewing existing loan documentation and shoring up security interests where necessary. Understanding Article 9's default and enforcement provisions has never been more important. Bankruptcy proceedings involving overleveraged producers and service providers will be hit...