Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Commodity Prices, Credit Ratings Share Slide

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Commodity Prices, Credit Ratings Share Slide

Article excerpt

When oil and gas prices go down, credit ratings hitch a ride.

After reevaluating commodity price assumptions for the next several years, Standard & Poor's Ratings Services shuffled through its deck of oil and gas companies and dealt dozens of downgrades last week.

Half of the 20 investment-grade oil and gas firms rated by S&P were downgraded, as were 25 of the 45 speculative-grade exploration and production firms.

About half of the oil and gas companies in the U.S. rated by the agency have a D- rating, indicating they are in default. There's more of that to come, warned Tom Watters, managing director of U.S. Oil & Gas at S&P.

"We expect, given the rating portfolio this year, that number to continue to grow quite significantly," he said during a webcast on Thursday.

In January, S&P lowered its price assumptions for the next three years - predicting $40-a-barrel oil and $2.50 per thousand-cubic-feet natural gas this year; $45 oil and $2.75 gas in 2017; and $50 oil and $3 gas in 2018. That triggered the reevaluations.

Mr. Watters said the low prices are being caused and exacerbated by a glut of oil and gas that isn't subsiding as quickly as everyone hoped it would.

The agency put a negative outlook on Marcellus Shale producer Range Resources Corp. while keeping the company's credit rating the same. Another Marcellus producer, Southwestern Energy Corp., got a credit downgrade and a negative outlook.

S&P didn't change the ratings of Downtown-based EQT Corp., Canonsburg-based Rice Energy Inc. and Denver-based Antero Resources. All three are considered to have a stable outlook.

Moody's Investor Service finished its own review of 11 U.S. exploration and production companies last week, downgrading Range but sparing Antero.

In general, Marcellus players fared better than peers in other shale basins, and that's not a coincidence. …

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