Lower 48 Corporate Debt Monitor: continued balance sheet divergence

Modest price stabilisation has not alleviated leverage and balance sheet concerns across the Lower 48 corporate space. Overall net debt has increased year to date, while remaining liquidity fell. Many operators still have maximum potential debts that exceed base case net asset values. Producers have effectively reduced nearer term liabilities in 2021 and 2022, but persistent concerns about liquidity and covenant breaches continue to hang over the sector. The range of asset coverage ratios and continued divergence in bond yields demonstrate the continually growing disparity between the financially sound and the distressed. The updated Lower 48 Corporate Debt Monitor addresses the balance sheet landscape across our Lower 48 coverage and quantifies asset coverage, covenant and liquidity considerations, maturity outlooks, and the impact of year to date corporate actions.