(WO) — Credit conditions for global oil and gas producers strengthened during the first half of 2026, with exploration and production companies leading industry upgrades as higher crude prices improved earnings expectations, according to a new Moody’s Ratings report.
Moody’s upgraded 13 oil and gas companies globally during the first six months of the year, compared with seven downgrades. While the pace of upgrades slowed from recent years, rating momentum improved markedly during the second quarter following the onset of the Middle East conflict and resulting increase in oil prices.
E&P companies recorded six upgrades during the period, the highest of any oil and gas segment. The number of E&P upgrades in the second quarter was twice that recorded during the first quarter. Oilfield services companies accounted for another four upgrades, all involving offshore operators, while midstream companies recorded three. No integrated or refining and marketing companies were upgraded.
Moody’s expects earnings growth for E&P and integrated oil companies to remain elevated through 2026, supported by higher commodity prices and modest production growth. However, the ratings agency cautioned that persistently high oil prices or fuel rationing could weaken broader economic activity and ultimately weigh on energy demand.
The improvement has been particularly visible in the Americas. North American and Latin American oil and gas companies accounted for 12 of the 13 global upgrades in H1, compared with six downgrades. Moody’s said 11 of the 13 upgrades globally resulted from company-specific improvements in credit fundamentals, while two were related to acquisitions.
Despite leading the industry in upgrades, E&P also accounted for the most downgrades, with three during the first half. The period included two distressed exchanges among E&P companies and one bankruptcy filing in the oilfield services sector.
Permian Resources was one of the most notable positive moves, becoming investment grade in April. Moody’s attributed the upgrade to strong operating and organic reserve-replacement performance, prudent capital allocation and conservative financial policies, along with expectations for accelerated debt reduction supported by strong 2026 free cash flow.
Viper Energy and Antero Resources were also identified as potential “rising stars,” a designation for companies that could move into investment-grade territory. Moody’s reported no potential fallen angels—companies at risk of losing investment-grade status—as of June 30.
The outlook is less robust for the U.S. oilfield services sector. Moody’s expects demand for onshore drilling and oilfield services to remain subdued in the U.S. through 2026, while international and offshore markets provide greater support for service companies.
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