Moody’s downgrades U.S. oilfield companies

Moody's Investors Service said it concluded rating reviews on 11 U.S. oilfield services companies and confirmed one company, downgraded five companies by one notch, four companies by two notches and one company by three notches.

The following actions were taken:

• Bristow Group Inc.: Corporate family rating downgraded to Ba3 from Ba2 with a negative outlook;

• Cactus Wellhead LLC: Corporate family rating downgraded to Caa1 from B3 with a negative outlook;

• CJ Holding Co.: Corporate family rating downgraded to Caa3 from B3 with a negative outlook;

• Compressco Partners, LP: Corporate family rating downgraded to B2 from B1 with a negative outlook;

• Era Group Inc.: Corporate family rating downgraded to B3 from B1 with a negative outlook;

• HGIM Corp.: Corporate family rating downgraded to Caa2 from B3;

• Hornbeck Offshore Services, Inc.: Corporate family rating downgraded to Caa1 from B2 with a negative outlook;

• Light Tower Rentals, Inc.: Corporate family rating downgraded to Caa1 from B3 with a negative outlook;

• PHI, Inc.: B1 corporate family rating confirmed, SGL-1 speculative grade liquidity rating assigned;

• Prowler Acquisition Corp.: Corporate family rating downgraded to Caa1 from B3 with a stable outlook; and

• UTEX Industries, Inc.: Corporate family rating downgraded to Caa2 from B3 with a stable outlook.

Oil prices have dropped substantially reflecting continued oversupply in the global oil markets, very high inventory levels and additional Iranian oil exports coming on line.

Moody’s lowered its oil price estimates on Jan. 21 and expects a slow recovery for oil prices over the next several years. It expects that oilfield services companies will face an extremely challenging operating environment through at least 2018.

Significantly reduced upstream capital spending and the declining creditworthiness of upstream customers coupled with an already over-supplied equipment market will keep pricing under heavy pressure through 2018.

Leverage and cash flow metrics are expected to deteriorate into 2017 as demand for oilfield services declines.

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