Standard & Poor's Ratings Services expects generally favorable rating trends to persist in the U.S. oil and gas sector this year, noting that upgrades have outpaced downgrades in the sector by nearly six to one through the first half. "Robust hydrocarbon prices and improved operating performance-particularly by companies in the service sector-are the key drivers of positive ratings activity," says Standard & Poor's credit analyst Ben Tsocanos. He notes that price volatility is more pronounced on the upside, which also helps to provide a beneficial operating climate for the sector. However, from a credit-quality standpoint, several factors continue to limit improvement for ratings in the near term. "Operating costs remain high across all sectors of the industry," Tsocanos says. "Moreover, share-repurchase activity continues to reach levels that would have been hard to imagine just a year ago." For more on this, see the September issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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