S&P Global Ratings on Tuesday warned 13 oil and gas companies, including ExxonMobil, Shell and Total, of downgrading its credit ratings to reflect the rising risk of energy change, market uncertainty and potential lower profitability for their businesses.
In a statement, the agency said it could downgrade their credit ratings within a few weeks as the energy transition, price volatility, and weaker profitability are increasing risks for oil and gas producers.
Stressing the pressures on profitability, specifically the return on capital as a result of high dollar capital investment levels over 2005-2015 and lower average oil and gas prices since 2014, the agency said these factors are “more material for ratings now than they were previously.”
Australia's Woodside Petroleum as well as the multinationals Chevron, Exxon Mobil, Imperial Oil, Royal Dutch Shell, Shell Energy North America, Canadian Natural Resources, ConocoPhillips and the French group Total are among the companies being placed on "CreditWatch" with negative implications.
Noting that it does not expect to downgrade its oil major credit ratings by more than one notch at the end of the review, the agency still did not exclude a combination of the industry risk revision and other material factors leading to a two-notch downgrade, especially given the potential for negative surprises after the COVID-19 impacts in 2020.
In addition to credit rating assessments involving China's national oil giants CNOOC and CNPC, the agency said its credit outlook for BP and Suncor Energy has been revised from stable to negative.
By Sibel Morrow