S&P downgrades Nine Energy

S&P said it downgraded Nine Energy Service, Inc. and the company’s unsecured notes to B- from B on weaker sector conditions. The recovery rating remains 4, mirroring S&P’s estimate of an average (30%-50%, rounded estimate: 45%) recovery in the event of a payment default.

“We anticipate Nine Energy Service and other oilfield service providers will continue to face headwinds from reduced exploration and production (E&P) spending, commodity price volatility, and equipment oversupply over the next few years,” said S&P in a press release.

“The downgrade is primarily driven by our expectation for declining revenue and margins in the second half of 2019 amid reduced E&P activity and pricing pressure from intensifying competition among oilfield servicers,” the agency said.

The outlook is stable.

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