OREANDA-NEWS. The credit metrics of most rated upstream and integrated national oil companies (NOCs) in Asia will deteriorate in 2016 to levels that are weak for, or leave little headroom under, their stand-alone credit profiles, says Fitch Ratings. But state links will buffer their ratings. In contrast, non-state-linked upstream companies face higher risk to their ratings this year.

Negative rating actions in APAC since oil prices started the rapid decline in 2H14 have been largely limited to small upstream companies and independent oilfield services companies. These companies face profound challenges on capital access and liquidity when oil prices are low.

We expect companies to seek further capex and opex cuts as they revise their budgets for 2016, and to update guidance along with their 2015 results announcements. But capex flexibility varies depending on each company's oil and gas reserves profile - where some companies are more constrained than others. We expect broadly flat upstream production in 2016 for most companies due to reduced investments. Lower upstream capex to preserve cash can also lead to medium-term challenges for operators with weak reserve lives.

Our report published today, "APAC Oil Companies' Financial Profiles Under Pressure, but NOC Ratings Intact", details the stand-alone credit profiles of NOCs - including the headroom for their stand-alone credit assessments. The report also details the headroom for the Issuer Default Ratings of 11 rated companies in Asia-Pacific with large upstream exposures. Our forecasts are based on our updated oil price assumptions and on guidance rated companies have provided to date on capex, dividends and other measures to support the quality of their balance sheets.