Fitch

Access to shale natural gas from the United States will lower Mexico’s historically high electricity prices and encourage the siting of industrial operations in Mexico, according to an analysis by Fitch Ratings.

Four recent bankruptcy filings by exploration and production (E&P) companies have pushed the trailing 12-month (TTM) U.S. high-yield (HY) bond default for E&Ps to a record 27%, while the TTM default rate for the energy sector is approaching 14%, according to Fitch Ratings Service.

Distressed debt exchanges, a lifeline used since last spring by many struggling natural gas and oil producers, may no longer be a viable alternative to prevent being swept away by washed out commodity prices, according to Fitch Ratings.

Local distribution companies’ (LDC) rusty old steel pipes have a silver lining: they offer organic growth opportunities that can often be easily financed through the rate base, according to Fitch Ratings. This is helping make LDCs the growth play in the broader utilities sector.

The sky-is-falling scenario that producers were expected to face as crude oil prices collapsed last year has yet to make a big dent in lending, according to Fitch Ratings.

A sample of six Marcellus Shale operators taken by Fitch Ratings shows, not surprisingly, that weak realized natural gas prices related to an ongoing supply glut in the Northeast could further inhibit production growth in the play next year.

Low natural gas prices and a consequent pullback from drilling have hit Arkansas hard. During the fiscal quarter ended Sept. 30, gross natural gas severance tax revenues were less than half what they were during the year-ago period. Arkansas isn’t alone, but the oil/gas downturn is affecting producing states differently, Fitch Ratings said.

It could be a long road back for deflated methanol prices, and recent declines in oil and oil-linked commodities, and overall global economic headwinds are likely to continue to pressure methanol prices in the near term, according to Fitch Ratings.

Although several new ethane crackers and export facilities are on the horizon, Fitch Ratings said U.S. natural gas liquids (NGL) prices will remain weak for the rest of the year and into the medium term, but they could also get worse, in part due to oil and gas producers becoming more efficient with shale drilling.