U.S. Markets close in 1 hr 51 mins

Fitch: Lifting of Crude Export Ban Would Have Varied Credit Implications for U.S. Energy Sector

Jan 27 (Reuters) - (The following statement was released by the rating agency)

The potential removal or modification of the U.S. crude export ban would have a limited effect on the credit quality of U.S. energy companies, with varying impacts depending on the industry segment, according to a Fitch Ratings report.

Fitch expects exportation and production (E&P) companies to experience stronger profitability resulting from higher U.S. prices relative to world benchmarks. By contrast, the effects would be negative for North American refiners as the deep discounts that North American crudes currently have would narrow. Lifting the export ban would be a mixed scenario for midstream segments (pipelines, storage, crude logistics) with effects determined on a case-by-case basis.

Similar to the impact expected for the midstream, Fitch believes that higher U.S. oil realizations would boost the overall economics of shale plays. The effect would be a boost in production of associated gas found in many of those plays—potentially helping to keep natural gas prices restrained over an extended period and prolonging weakness in dry gas plays.

Link to Fitch Ratings' Report: Scenario Analysis: Lifting the Crude Export Ban (Overall Credit Impact Limited but Varies by Industry)