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Key Credit Factors For U.S. And Canadian Independent Oil And Gas E&P Companies Sep 06
Standard & Poors, Sep 2006
Abstract
With oil and gas prices currently at elevated levels and exploration and production (E&P) companies reaping record profits, credit risk might not seem so important right now. However, investors must remain aware that in this highly cyclical industry, prices can drop even more quickly than they rose. The peak and trough prices of natural gas over the past 12 months provide a sobering example: by September 2006, gas had fallen to under $6 per million BTU (mmBTU) from more than $13 in October 2005. Other worrisome trends include rising oilfield services costs and poor reserve replacement records. When assigning credit ratings in this sector, Standard & Poor's Ratings Services recognizes that, while the short-term outlook looks favorable, the risk of...
Companies mentioned in this report are: BP PLC,Occidental Petroleum Corp.,Chevron Corp.,EOG Resources Inc.,Chesapeake Energy Corp.,Devon Energy Corp.,ExxonMobil Corp.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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