Oil & Gas Handbook (North American Exploration and Production)

...Outlook: The North American exploration and production (E&P) rating outlook remained relatively stable over the course of 2019 with 86% of rated E&P issuers currently on Stable or Positive Outlook, compared with 91% at the start of the year and 86% in second-half 2018. E&P issuers on Positive Outlook, Continental Resources Inc. and Noble Energy Inc. rated `BBB¡', are forecast to exhibit improving leverage metrics and resilient through-the-cycle positive FCF profiles. Other issuers on Positive Outlook, such as MEG Energy Corp. (B), are expected to allocate positive FCF generated in the near-term forecast toward gross debt reduction. Issuers on Negative Outlook or Negative Watch, EQT Corp. (BBB¡/Negative) and Unit Corp. (B/Rating Watch Negative), are experiencing heightened refinance or liquidity pressures. Declining Netbacks: Fitch Ratings estimates unhedged netbacks declined 10.7% yoy and 4.6% since YE 2018, driven by declining gas and NGL realized prices or increasing gathering and transportation...

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