The credit profiles of Latin American oil and gas companies will remain stable in 2012 despite ambitious investment programs, according to Fitch Ratings.
Fitch-rated oil and gas (O&G) issuers benefit from strong cash positions, buffered by higher oil prices and conservative debt structures with long-term maturity profiles. Companies are positioned favorably to withstand difficult market conditions over the next 12 months.
Fitch expects regional national oil companies (NOCs) will take on additional leverage in 2012 to fund aggressive investment programs, with total capital expenditures expected to total USD84 billion in aggregate for the year. The availability and cost of funding is a concern due to the sector's medium term capital needs. Fitch anticipates regional governments will provide ongoing liquidity support through state-owned banks.
Rising fixed costs including escalation in labor and energy costs will cause a rise in production expenses.
The sector outlook would shift to negative if prices and /or demand for global oil and natural gas demand decline sharply or over a longer-term period. Debt-funded capital expenditures significantly above Fitch's estimates could also move the outlook to negative.
The full '2012 Outlook: Latin America Oil & Gas' is available at 'www.fitchratings.com.'
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: 2012 Outlook: Latin America Oil & Gas
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=665649
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