[ET Net News Agency, 21 May 2018] Rallying oil prices are a credit positive for most
Asia-Pacific oil companies. The rally is boosting cash flows but spending plans should
remain relatively conservative, S&P Global Ratings said today in a report titled,
"Asia-Pacific Oil And Gas Companies: Will High Oil Prices Go To Their Heads?"
"Asia's national oil companies are generating larger cash flows on higher oil prices,
but we don't expect this will lead to a hunt for more resources as during the last
upcycle," said S&P Global Ratings credit analyst Danny Huang.
"Given changing structural demand dynamics for oil and the memory of the last
commodities bust, we expect many countries to maintain fairly conservative financial
policies." he added.
In this sector review, the agency aggregated its earning and spending estimates for 26
sector companies it rates in eight Asia-Pacific countries. S&P forecast that the average
debt to EBITDA ratio will decline for our 16 rated exploration and production (E&P) and
integrated oil and gas (O&G) companies.
It also rated 10 refiners and expects stable, rather than improving, operating metrics
for this segment. S&P Global Ratings has raised its assumptions for the Brent oil price
benchmark, but they remain below spot prices which last week breached US$80 a barrel
(bbl).
It now assumed Brent to average US$65/bbl for the rest of 2018 and US$60/bbl for 2019,
up from US$60/bbl and US$55/bbl, respectively. S&P maintained its long-term oil price
assumption at US$55/bbl. (KL)