3 January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite HY E&P approaching a "normal" sector in the new normal oil market In the first two years following the dramatic collapse in oil prices in 2H 14, E&P players were largely focused on structural changes to the business model which could fit into a restructured oil market. On the capital structure side, this included major efforts to repair the balance sheet via equity raise, conversion of debt to equity, some more distressed exchanges and debt reduction via asset sales. On the asset portfolio side, we saw many players implementing major overhauls - mainly a shift to the Permian by names like WPX, QEP and SM Energy. Others expanded their footprint in their core basins - not just established Permian players, but also companies in second tier basins like Bakken (Oasis) or Eagle Ford (Sanchez). During this period, corporate strategies revolved around fundamental sector views (long term oil prices, preferred basins) and financial management by companies (equity raises, major divestitures). By early 2017. broad financial and portfolio strategies for most companies were largely in place. Post-OPEC deal in November 2016, the HY Energy sector was trading only 25 bps wide of the broader HY index, reminiscent of spreads seen during 1H 14, and a far cry from the >1,000 bps gap in early 2016. Meanwhile, the oil markets in 2017, while volatile, have answered some concerns regarding oil price downside risk by establishing the $40 floor (for WTI). With the oil market settling at the "new normal" range, the exit of weak players from the market and major sector themes (like the Permian Premium) having played out, the HY E&P group has been transitioning to a "normal" HY sector with standard credit themes like operational performance, cash flow models, and balance sheets allowing for greater differentiation - in many ways similar to pre-2014 market, except for the keen new learned awar