...Half-Cycle Costs to Remain Low: Half-cycle costs for Latin American oil and gas companies, as calculated by Fitch Ratings, were slightly higher in 2018, at 3%, after an increase of 11% in 2017. This marginal increase is due to higher lifting and selling, general and administrative costs, partially offset by interest expenses. This trend is negligible compared with the recovery of global oil prices of 27.6% yoy in 2018. Half-cycle, or periodic costs, remained below market prices for both integrated and independent issuers. Weighted average liquids realization prices during 2018 stood at approximately $73.20 per barrel (bbl), compared with $60.20/bbl in 2017. Half-cycle costs were about $22.50/barrels of oil equivalent (boe) in 2018 from $21.80/boe in 2017. Fitch views these production costs increases similar to other global peers. Lower Prices Will Limit Profitability: We expect profitability, measured as the difference between the realized crude oil prices and half-cycle costs, to decline...
