Global Oil and Gas Sector Ratings Continue to Slide with Falling Demand

With a global recession and scarce liquidity, it's no surprise that oil and gas companies are struggling and that the sector's credit quality has been slipping, according to a ratings roundup article Standard & Poor's Ratings Services.

Indeed, through the first half of 2009, downgrades of oil and gas companies that Standard & Poor's Ratings Services rates outpaced upgrades by a ratio of nearly 8 to 1. And nearly one-third of the companies in the sector have a negative outlook.

The article, "Ratings Roundup: Global Oil And Gas Sector Ratings Continue To Slide With Falling Demand," cites several key reasons for a surge in negative ratings actions. They include depressed natural gas prices, reduced demand for oilfield services, tighter credit markets and more difficult terms for lower speculative-grade credits, and difficult global economic conditions.

"So far through 2009, we have seen a significant number of negative ratings actions, and we believe this trend will persist through the end of the year, with an increasing number of ratings migrating toward the lower end of the ratings spectrum," said Standard & Poor's credit analyst Suzana Zayed.