Fitch Updates 2012 Oil and Gas Price Decks

CHICAGO--(BUSINESS WIRE)--

Fitch Ratings has revised its 2012 price decks for both U.S. oil and natural gas, reflecting various market factors and underlying conditions.

Fitch has raised its 2012 base case oil price to $87.50/barrel for West Texas Intermediate (WTI) and to $95/barrel for Brent to reflect near-term market factors. Long-term prices for WTI and Brent remain unchanged at $65/barrel and $70/barrel, respectively. These base cases incorporate the reliance by oil companies on emerging market growth, lingering geopolitical risks, and investor concerns with global inflation.

Current oil prices remain well above Fitch's long-term base case expectation. While prices could rise due to increased geopolitical tensions, Fitch believes downside risks to oil prices remain significant. Fitch also notes that oil and liquid prices continue to drive the majority of capex decision in the exploration and production sector.

Fitch has also lowered its U.S. natural gas price deck with 2012 base case Henry Hub (HH) prices at $3.25 per thousand cubic feet and long-term prices lowered to $5.00/mcf from $5.50/mcf. The drop reflects the combination of warm weather, continued weakness in the U.S. economy and the ongoing supply of unconventional natural gas from U.S. shale production.

Fitch's price deck intends to reflect a more conservative view of future price levels for modeling and rating purposes, and for evaluating future commodity price expectations from a bondholder perspective. Fitch's price deck will often remain below current spot and future markets as a result. The price deck also reflects just supply/demand fundamentals, particularly the long-term price deck, with the recognition that near-term events can result in significant deviations from fundamental levels.

The full report 'Updating Fitch's Oil & Gas Price Deck' is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Updating Fitch's Oil and Gas Price Deck

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Fitch Updates 2012 Oil and Gas Price Decks