Oil and gas industry trends in 2022 From S & P

The following is the Oil and gas industry trends in 2022 From S & P recommended by recordtrend.com. And this article belongs to the classification: Investment & Economy, research report.

Many oil and gas producers’ ratings clearly benefit from the rebound in hydrocarbon prices, which enables listed companies not only to generate healthy credit indicators, but also to reduce debt and repair balance sheets.

For independent and integrated oil and gas companies, S & P will look at data over a period of 3-5 years, and as prices decline in subsequent years, it is necessary to reduce debt to improve indicators. For speculative issuers, S & P expects the rating to be more volatile than investment peers, and the improvement of credit indicators is the reason for most of the increase.

The rating action of the oilfield services (OFS) industry is mainly to revise the outlook from negative to stable. Unlike exploration and production (e&p), ofs issuers do not receive the same level of revenue from higher oil and gas prices because the exploration and production capital budget is still relatively limited. Private sector expenditure has increased significantly, but as an overall percentage of capital expenditure in North America, this is not enough to obtain higher prices and profit margins, thereby stimulating the upgrading momentum of ofs.

M & A activities increased significantly in 2021. Most activities involve low premium transactions, which are conservatively financed with high equity. The pace of M & A activity may slow down in 2022.

The rating outlook remained basically stable, with most balance sheets in much better shape. Although Standard & Poor’s expects hydrocarbon prices in 2022 to be good for credit. Due to the limited ability to further reduce debt, the increased use of free cash flow, and the growth of capital budget, the industry has basically underinvested in the past few years. Standard & Poor’s expects capital expenditure in North America to increase by an average of 15% to 20% this year, partly due to rising inflation costs, which are expected to increase by an average of 10% to 15%. Globally, capital expenditure may increase by 10% to 15%.

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