Moody’s acts on European oilfield companies

Moody's Investors Service said it concluded rating reviews on five European oilfield services (OFS) companies.

The agency confirmed the B3 corporate family rating and B3-PD probability of default rating of Bibby Offshore Holdings Ltd., negative outlook; downgraded KCA Deutag Alpha Ltd.'s corporate family rating and probability of default rating by one notch to Caa1/Caa1-PD from B3/B3-PD with stable outlook; CGG SA's corporate family rating and probability of default rating by one notch to Caa1/Caa1-PD from B3/B3-PD with negative outlook; Welltec A/S' corporate family rating and probability of default rating by one notch to B2/B2-PD from B1/B1-PD with negative outlook; and Petroleum Geo-Services ASA's corporate family rating and probability of default rating by three notches to Caa1/Caa1-PD from B1/B1-PD with negative outlook.

These actions conclude the reviews begun on Jan. 22 when Moody's placed the ratings of 32 integrated oil, exploration and production (E&P), and oilfield services companies in the EMEA region on review for downgrade. This reflected the substantial drop of oil prices and the continued oversupply in the global oil markets.

The agency also lowered its oil price estimates on Jan. 21 and assumes Brent oil price to average $33/boe in 2016 and $38/boe in 2017, with a slow recovery for oil prices over the next several years. The drop in energy prices and corresponding capital markets concerns will also raise financing costs and increase refinancing risks for OFS companies.

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