S&P downgrades eight US oil and gas firms
LONDON, Jan 19 (IFR) - Standard & Poor's has downgraded eight US oil and gas exploration and production companies after the ratings agency completed a review of the sector in light of the steep decline in oil prices.
The firms were WPX Energy, Energy XXI, Warren Resources, Swift Energy, Midstates Petroleum, Magnum Hunter Resources, Black Elk Energy Offshore Operations and Rooster Energy.
The agency has also lowered the outlook of 12 additional companies, while placing two more - Apache Corp and Breitburn Energy Partners - on CreditWatch negative.
The collapse in the oil price has put enormous strain on the US high-yield market, which has seen an influx of capex intensive energy companies raising bonds in recent years.
Despite the recent pressure, S&P said it found liquidity to be adequate at most companies for the next 12 months. This is because a number of the lower-rated companies have already hedged, many refinanced their revolving credit facility drawings ahead of the price drop, and most producers are cutting back their capex plans to preserve liquidity.
S&P warns that if prices don't recover next year, however, some of these firms could face "material liquidity pressures".
The downgrades are as follows:
WPX Energy from BB+/Negative to BB/Stable. Continued...