Williston, N.D., epicenter of the U.S. fracking boom earlier this decade, had the credit rating on four of its sales tax revenue bonds lowered six notches by Standard & Poor's (S&P) on April 28 amid lower regional production.

"The downgrade reflects our view of the precipitous decline in sales and use tax receipts that the city has reported since oil production peaked in the region in late 2014," said Scott Nees, a credit analyst with S&P.

Lower tax revenues has resulted in substantially weaker coverage of pledged sales tax revenues for debt service on the city's various sales tax revenue bonds, Nees said.

S&P lowered its rating on the city's series 2010 sales tax revenue bonds and its series 2011B, 2013A, and 2013B sales tax revenue bonds by six notches each and said the outlook was negative.

Williston, a regional hub city for the Bakken Shale region, boomed as new fracking technologies unlocked new supplies of oil and gas, but the collapse in oil prices in 2014 has driven many energy companies and workers out of the region, draining the city of tax revenues.

Last month, Moody's Investor Service downgraded Williston's $2.8 million of general obligation debt due to declining oil and gas production tax receipts.

Williston's 1% sales and use tax receipts—a portion of which secures its revenue bonds—has declined for five consecutive quarters, a trend that appears to have worsened considerably in the first part of 2016, S&P's Nees said.

If the declines continue in the second and third quarters, the city may need to tap into its debt service reserve fund or find other revenues to cover debt service, possibly in the next year.

The city's sales and use tax receipts peaked at $15.9 million in 2014 after growing by 287 percent from 2010 levels. Receipts began declining after the fourth quarter of 2014, however, and have declined each quarter since then, Nees said.

S&P said there is a one-in-three chance that it could lower its ratings further in the next year if sales tax receipts continue to decline.