Spring redeterminations look “modestly improved” for the oil and natural gas market, according to a survey of borrowers and lenders.

Haynes and Boone LLP’s spring 2017 survey polled a cross-section of executives within exploration and production (E&P) companies, which compose most of the borrowers, along with oilfield services companies, banks and private equity firms for their views about the financial state of the market.

Respondents were asked by the law firm to forecast the future borrowing capacity of E&Ps, which meet with lenders twice a year to assess borrowing bases, determinations that turn on projections about the future prices of oil and gas reserves.

“We’re seeing that many in the industry view the market with more optimism,” said Houston Partner Jeff Nichols, who co-chairs the energy practice group. “The survey provides valuable clarity because of its predictive view of the market. It is unlike other surveys or studies on this topic, which analyze borrowing bases after they have been adjusted.”

According to respondents, three-quarters (76%) of the E&Ps will see their borrowing bases “increase slightly or remain unchanged,” from fall 2016 borrowing bases. The new survey is an improvement from last fall, when respondents said they expected only 59% of E&Ps would see borrowing increase/remain unchanged.

Most of the respondents (89%) predicted that E&P capital expenditures would increase in 2017 from last year, with near two-thirds expecting “substantial” budget increases of 20% or more, in line with arecent survey of E&Ps by Raymond James & Associates Inc.

The spring 2017 survey also found that among those respondents predicting that borrowers would see an increase in their borrowing bases, most expect the increase to be about 10% above fall 2016 borrowing bases.

In addition, only 3% now see bankruptcy or restructuring as the “most likely path” that lenders or borrowers will take if faced with borrowing base deficiencies. Last fall, 13% viewed bankruptcy or restructuring as the most likely path if faced with shortfalls.

“The responses reflect a cautious optimism among producers and bankers for the road ahead, but I think everyone is still mindful of the capital destruction plainly visible in the rearview mirror,” said Energy Practice Co-Chair Buddy Clark.

Of the 163 respondents, 45% described themselves as oil and gas lenders, including private equity firms, 29% were producers (borrowers) and about 19% were professional service providers.