- Pan American Energy LLC (PAE): Assignment of B1 Global Local Currency Corporate Family Rating (replacing Global Local Currency Issuer Rating, which Moody's is downgrading to B1 from Ba3 and will withdraw); stable outlook

- Pan American Energy LLC, Argentine Branch: Foreign Currency Rating affirmed at B1; Global Local Currency Rating on its uncommitted bank credit line downgraded to B1 from Ba3; National Scale Rating on its uncommitted bank credit line downgraded to Aa2.ar from Aa1.ar; stable outlook

- Petrobras Argentina S.A. (PESA): Assignment of B1 Global Local Currency Corporate Family Rating (replacing Global Local Currency Issuer Rating, which Moody's is downgrading to B1 from Ba3 and will withdraw); Foreign Currency Rating affirmed at B1; National Scale Rating affirmed at Aa2.ar; stable outlook. Ratings unaffected by this action include the A3 Foreign Currency Rating and Aaa.ar National Scale Rating on US$300 million of Series S senior unsecured notes due 2017 supported by a standby purchase agreement with Petróleo Brasileiro S.A.

RATINGS RATIONALE

The rating actions for both companies reflect increased Argentine country risk following several actions taken by the government of Argentina in the oil and gas sector that indicate a highly unpredictable political and business environment. Most recently, the government announced a new Hydrocarbon Sovereignty decree, which appears to further centralize control over the oil and gas sector at the national level. While details over the implementation of this decree remain unknown, it clearly points to the risk of increasing government intervention in the energy sector, including new provisions for government review of company budgets and setting of reference prices for crude oil, natural gas and refined products.

Moreover, the latest decree follows several credit negative events in the sector, including the expropriation of a 51% stake in YPF Sociedad Anónima, tighter foreign-currency controls over the repatriation of export proceeds and access to foreign exchange, and increased pressure on the private companies to raise production and investment levels in the country. The government has taken these steps even as the oil and gas companies face high inflation (around 25%), the continuing effects of price controls and increasing exposure to labor unrest.

In addition, the E&P sector at large has been subject to increasing pressures at the provincial level, including moves or threats to cancel valuable concessions, albeit to various degrees, and the potential conflicts between the provinces and national government only exacerbate the uncertainty over the operating environment for the energy companies.

The downgrades more closely align the companies' ratings with the Argentine government's B3 rating to further reflect political risk in line with our rating actions from March of this year. Our ratings approach is further discussed in the rating implementation guidance "How Sovereign Credit quality May Affect Other Ratings," published on February 12, 2012. However, these companies continue to benefit from other factors that support their ratings being rated two notches above the government's B3 rating.

Our lower ratings for PAE factor in the company's concentration in Argentina, particularly in Cerro Dragón in the Golfo San Jorge Basin, exposure to increasing costs and labor unrest, and high degree of foreign currency convertibility and transfer risk, with the bulk of its debt denominated in foreign currency. We view these risks as more pronounced, even given PAE's ratings support from its strong track record servicing its foreign currency debt obligations during past Argentine financial crises, healthy foreign currency liquidity profile, sizable exports, limited reliance on domestic markets for funding, and strong shareholders that operate outside of Argentina, including BP p.l.c. (A2 stable) and CNOOC Ltd. (Aa3 stable, indirect stake through Bridas Corporation, not rated). In addition, the ratings are supported by the company's substantial reserve and production profile, low cost structure and conservative financial leverage metrics, which are on a fundamental level more indicative of an investment-grade profile.

PESA's operations are more domestically focused but also face increasing sector uncertainty. With declining reserves, the company's primary operational challenge will be to grow its mature reserves and production base over the next few years. However, PESA has been increasing its investment in exploration and its production has stabilized. It also has an external majority owner in Petróleo Brasileiro S.A. (A3 stable), which in recent years has increasingly directed the subsidiary's focus on operations and investments in Argentina. PESA in fact has a relatively limited export profile, primarily in chemicals and refined products, and we believe will be relatively less affected by the government's currency initiatives. In addition, PESA has been reducing debt and has liquidity in the form of cash and other assets available to service its predominantly foreign currency debt. Petrobras also guarantees a portion of PESA's long-term debt.

We are maintaining stable outlooks for both companies, given their fundamental operating profiles and financial positions, assuming that the new decree requirements for government approvals of company budgets will not prove too onerous. However, we do not rule out further negative actions in the future, particularly if government initiatives on setting reference prices or other actions put further pressure on the companies' liquidity, operations or debt service capabilities. We see limited upside potential for the ratings of either company as long the government continues to interfere in and hinder the sector.

The principal methodology used in rating PAE and PESA was the Global Independent Exploration and Production Industry Methodology published in December 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".ar" for Argentina. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in March 2011 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings."

Issuer: Pan American Energy LLC

..Downgrades:

.... Issuer Rating, Downgraded to B1 from Ba3

..Assignments:

.... Corporate Family Rating, Assigned B1

..Outlook Actions:

....Outlook, Changed To Stable From Negative

Issuer: Pan American Energy LLC, Argentine Branch

..Downgrades:

....Senior Unsecured Bank Credit Facility, Downgraded to B1 from Ba3

....Senior Unsecured Bank Credit Facility, Downgraded to Aa2.ar from Aa1.ar

..Outlook Actions:

....Outlook, Changed To Stable From Negative

Issuer: Petrobras Argentina S.A.

..Downgrades:

.... Issuer Rating, Downgraded to B1 from Ba3

..Upgrades:

....US$2500M Secured Medium-Term Note Program, Upgraded to (P)Ba3 from (P)B1

..Assignments:

.... Corporate Family Rating, Assigned B1

..Outlook Actions:

....Outlook, Changed To Stable From Negative

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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Gretchen French VP - Senior Credit Officer Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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