S&P Global Ratings downgraded Nine Energy Services Inc. to 'CCC-' from 'CCC+' and placed the issuer on a negative outlook, pointing to weakening liquidity driven by lower U.S. oilfield activity and an expected mismatch between cash generation and interest costs in 2026.
In its assessment, S&P projects Nine will report EBITDA of about $30 million in 2026 while facing roughly $45 million of interest expense, which the company pays semiannually in February and August. That projected gap leaves the company with limited cushion to meet debt-servicing requirements despite the absence of a bond maturity until February 2028.
S&P detailed the company's stated liquidity as of September 30, 2025 at roughly $30 million. That figure is composed of about $14 million of unrestricted cash plus approximately $25 million of availability under its asset-based lending facility, even though $63.3 million remained drawn on that facility. After factoring in minimum availability requirements associated with a fixed-charge coverage ratio covenant, S&P estimates Nine could draw only about $15 million in additional capacity.
Using those assumptions, S&P anticipates a free cash flow shortfall of $25 million to $30 million for the coming period, reflecting weaker services pricing as competition intensifies and overall activity declines amid consolidation among exploration and production companies. The ratings agency characterized Nine's liquidity profile as weak and concluded that, within roughly the next six months, the company will likely either miss an interest payment, execute a distressed debt exchange or undertake a restructuring transaction.
Nine's business mix is concentrated geographically and operationally: about 95% of revenue is generated across major U.S. basins and activity depends on volatile drilling and completions work rather than steady production revenue. The firm's modest scale - with reported EBITDA near $45 million in 2025 - limits its ability to influence pricing compared with larger competitors, according to S&P.
Market conditions in early 2026 added further pressure. S&P noted that rig counts were down 13% and frac spreads were down 15% year-over-year in early 2026. The agency's commodity price assumptions include West Texas Intermediate at $55 per barrel in 2026 and $60 in 2027, along with an expectation that disciplined capital spending by exploration and production companies will reduce U.S. activity. For Nine, that outlook implies lower revenue and a contraction of EBITDA margins to about 9% in 2026 from an estimated 11% in 2025.
The company's capital structure and market pricing also reflect distress concerns. Nine has $300 million outstanding in 13% senior secured notes due in 2028 that are trading at roughly 23 cents on the dollar. S&P said such pricing increases the likelihood of a debt repurchase or restructuring that would be treated as distressed. In the equity markets, Nine faces the risk of delisting from the New York Stock Exchange because its shares have traded below $1 since June.
S&P indicated the rating could be lowered further if default becomes virtually certain, particularly if Nine were to announce a missed interest payment or a distressed exchange offer. Conversely, the agency said an upgrade would be possible only if Nine generated positive free cash flow and materially strengthened its liquidity position.
Context and implications
This rating action highlights pressure points on Nine's balance sheet - primarily the projected gap between cash generation and fixed interest obligations and constrained access to borrowings under existing covenants. The downgrade signals heightened probability of near-term creditor-driven outcomes, including restructuring, absent a material improvement in operating cash flow or liquidity.