Declining Oil Price Causes Oil Companies' Ratings to Drop
18 December 2014 22:34 WIB
TEMPO.CO, Jakarta – The declining oil price has caused oil and gas companies to be cautious in either investing their money or expanding their business, as the wrong move is likely to cause a drop in their ratings.
Fitch Ratings associate director Cheryl Evangeline said declining oil price and increasing capital expenditure in 2015 may lower oil and gas companies' ratings in South East Asia. Cheryl said lower oil price would decrease revenue.
“However, Fitch Ratings predicted the ratings of those companies would remain,” Cheryl said in a press release on Thursday, December 18, 2014.
Oil and gas companies in South East Asia, Cheryl said, had enough liquidity to anticipate the declining oil price at under US$75 per barrel. He said in such a condition, these companies would need higher capital expenditure to support their investment in the upstream sector.
Fitch viewed that low oil price would provide companies in Southeast Asia with acquisition opportunities. However, he went on, weak cash flow could stymie merger and acquisition efforts.
FAIZ NASHRILLAH