Bangkok--Aug 19--Moody's Investors Service
MOODY'S SEES STABLE-TO-POSITIVE RATING OUTLOOK FOR ASIA'S OIL & GAS SECTOR
Approx US$14.5 billion of debt securities affected
Moody's Investors Service says - in a major new report - that the overall rating outlook for Asia's oil and gas sector is stable-to-positive, as the synchronized up-cycle evident in the upstream and downstream sectors is expected to prevail, albeit with moderation, over the next 12-18 months.
For the exploration and production sector, which has a stable rating
outlook, the strong oil price environment has enabled companies to maintain high levels of operating cash flow as well as fund reserves development with little incremental debt, the report says. Accordingly, the sector's companies are very well positioned to withstand a potential moderation in oil prices from the current highs. The benefits accrued from high oil prices are impacting the companies differently, based on their production mix and growth profiles, the report adds.
In regard to the refining and marketing sector, which has a stable-to-positive rating outlook, Moody's expects the persistence of solid supply-demand fundamentals over the next 12-18 months, the report says. The expectation for continued solid, but potentially moderating, demand from China, combined with limited new refining capacity, provides support for refining margins over that period.
The just-released report is entitled Asia's Oil & Gas Sector: Stable-to-Positive Rating Outlook as Solid Credit Fundamentals Continue, and is authored by Terry Fanous, a Vice President / Senior Credit Officer in Moody's Sydney office.
"This report is the latest version of our annual review of the oil & gas
sector in Asia. We look at a broad range of themes - such as expectations for oil prices and refining margin trends, production profiles, cost management, and capital reinvestment - to see how these factors are impacting the credit profiles and ratings of issuers " Fanous says.
Moody's rates 10 oil and gas companies in Asia (excluding Japan). All are major operators in their respective countries, and six are state-owned, or substantially owned by the state or state-owned enterprises.
After a year of some positive rating trends, Moody's believes there is
likely to be more moderate rating movements in the next 12-18 months, the report says. Ratings are positioned to take into account the trends Moody's sees over the next 12-18 months.
Some of the key trends include oil prices and refining margins remaining
well above long-term averages; growing appetite for overseas investments; active capital investment programs for most companies, increasing reserve replacement challenges, and continued pressure on marketing margins in some regulated environments.
The integrated oil and gas companies rated by Moody's have a stable rating outlook, and are well positioned in their ratings, the report says. The companies are generating record earnings and cash flows due to the benefits derived from almost all aspects of their businesses.
Sydney
Terry Fanous
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Pty Ltd
612 9270 8100
Sydney
Brian Cahill
Managing Director
Corporate Finance Group
Moody's Investors Service Pty Ltd
612 9270 8100 End.