Just a few years ago, when oil sold for about $100 a barrel, banks here were lining up to give international oil explorers access to billions of dollars to finance new drilling and projects. But as oil prices stay mired in a funk, the money is drying up. Senior executives from companies such as Tullow Oil PLC and Cairn Energy PLC have been meeting with their bankers for a biannual review of the loans that allow them to keep drilling and building out projects. For many European companies, it has been a nail-biting experience, as banks worry about the growing pile of debt taken on by oil companies with little or no profits. Several companies said they expect their ability to tap credit lines to be diminished after the reviews. Just a few years ago, when oil sold for about $100 a barrel, banks here were lining up to give international oil explorers access to billions of dollars to finance new drilling and projects. But as oil prices stay mired in a funk, the money is drying up. Senior executives from companies such as Tullow Oil PLC and Cairn Energy PLC have been meeting with their bankers for a biannual review of the loans that allow them to keep drilling and building out projects. For many European companies, it has been a nail-biting experience, as banks worry about the growing pile of debt taken on by oil companies with little or no profits. Several companies said they expect their ability to tap credit lines to be diminished after the reviews. Reviews of these loans have high stakes. If a bank decides a company has already borrowed more than it can afford, the reviews could trigger a repayment, more cost cuts or even a fire sale of assets to raise cash. Many of the reviews have concluded, or will soon, and the results could be known as soon as this week. “There isn’t anyone in the oil independent sector that will be very relaxed at the moment,” said Thomas Bethel, a partner specializing in energy finance at Herbert Smith Freehills LLP. Oil companies are facing a similar set of biannual reviews in the US, where many small and midsize companies borrowed heavily to expand during the shale boom. The number of energy loans deemed in danger of default is on course to breach 50% at several major US banks, The Wall Street Journal reported last week. But some American firms have been able to raise cash by issuing new stock or selling new debt, while in recent years Europe-based explorers have come to rely more on bank lending as investors that once pumped up the industry are fleeing in droves. In Europe, the focus is on a specialized type of borrowing known as reserves-based lending that has mushroomed in recent years. Europe’s top 10 non-state-owned oil companies have taken on over $12 billion in such loans, which are particularly exposed to energy prices as they are secured against the value of a company’s petroleum reserves and future production. At Tullow, Chief Financial Officer Ian Springett said he thinks the company could lose some ability to draw on its $3.7 billion credit line with its banks. Cairn expects its banks will allow it access to only about $335 million of the $400 million in credit that was once available. “When oil was at $100 a barrel, debt was easy to get,” Cairn Chief Executive Simon Thomson said in an interview. “What we’re seeing today is a number of people suffering the hangover of having secured that debt and now possibly having trouble servicing it.” The stakes were underscored in February when First Oil Expro, a subsidiary of the largest privately owned UK North Sea oil producer, called in the administrators—a process similar to filing for chapter 11 bankruptcy in the US First Oil Expro was unable to meet its share of costs on one big development and was unable to keep up payments on loans in excess of $150 million. “The key issue around First Oil Expro’s demise was the sharp fall in the oil price which led to a significant loss of confidence in the sector,” said Jim Tucker, joint administrator of First Oil Expro and restructuring partner at KPMG. The oil-company debt reviews come at a tough time for oil explorers that aren’t brand names but take risks to open up fields in risky regions that bigger companies such as Exxon Mobil Corp. often tap into later, such as Kurdistan in Iraq. Investors pulled back from these companies as oil prices fell, sending share prices into the basement. That crimped their ability to raise cash by issuing new stock or selling new debt, such as corporate bonds, analysts say. The explorers’ revenues also fell, and many had to cut the value of their fields and reserves. Some factors are working in the energy companies’ favor. Banks have an incentive not to turn the screws too tightly on oil companies, forcing them out of business and into default on loans. Several companies also have oil and gas fields that are set to begin production soon and provide a jolt of cash. At Tullow, Mr. Springett said the company was on firm ground because a large oil field in Ghana is due to begin pumping later this year. And Cairn is developing fields in the UK North Sea that are due to come onstream next year, Mr. Thomson said.