Fitch: Stable Outlook for Latin America Oil and Gas Industry in 2011

BUENOS AIRES, Argentina--(BUSINESS WIRE)--Fitch Ratings expects the credit outlook for the Latin America oil and gas industry to remain stable in 2011, supported by solid global demand and moderate improvement in operating margins, according to a new report released by Fitch Ratings.

Many Latin American national oil companies (NCOs) have raised their investment programs to support the growth in global energy demand, and have set aggressive oil and gas production volume targets. In addition, the extensive production growth programs include operating in non-traditional challenging areas that will require the use of higher cost technology, and operating in higher cost deep water areas, which will put upward pressure on capex.

'Most sector companies will require funding from external sources to implement their investment programs,' said Ana Paula Ares, Senior Director, Fitch Ratings. 'We anticipate strong financial support from the local financial community and the capital markets for the regional oil companies.'

Fitch notes that most companies have the capacity for additional debt, enjoy strong support from the domestic and international financial markets and benefit from solid liquidity.

The sector could move to a negative outlook if global oil and natural gas demand declines sharply or for a long period, or if debt funded capex is significantly above Fitch's current expectations. Fitch believes a move to a positive outlook is unlikely given issuer focus on capital investments.

The full '2011 Outlook: Latin American Oil & Gas Sector' is available on the Fitch web site www.fitchratings.com. Fitch will host a teleconference during the first week of January 2011 that will cover all of the Latin American corporate sectors.

Additional information is available on the Fitch Ratings web site at www.fitchratings.com.

Applicable Criteria and Related Research: 2011 Outlook: Latin America Oil and Gas Sector

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=592965

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