S&P upgrades Pan American Energy

Standard & Poor's said it raised Argentina-based Pan American Energy LLC's corporate credit rating to BB- from B+ and removed it from CreditWatch with positive implications, where it was placed on March 23. The outlook is stable.

The upgrade reflects the agency's conclusion that the company's outstanding financial and adequate operating performance, coupled with short- and medium-term positive price prospects, have strengthened its financial profile and the company's ability to service its financial obligations even under more severe stress scenarios and within the uncertainties of operating in the volatile Argentinean environment.

S&P said the ratings reflect the company's heavy concentration in Argentina, which exposes the company to the risks of operating under a highly uncertain and rapidly changing economic and regulatory environment, as well as a significant need for capital expenditures to develop its large reserve base.

The ratings positively reflect the company's relatively large reserve base, low operating costs, outstanding credit measures and a very sound financial profile, the agency said. Free cash flow to total debt was 39.3% for 2005.

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