Exxon, Chevron Curtail Outlook

Exxon, Chevron Curtail Outlook

Exxon Mobil Corp. and Chevron Corp. were among several US oil and natural gas producers that had their outlooks or ratings cut by Standard & Poor’s as the industry suffers from weak crude prices, hurting their cash flow and liquidity.
S&P cut ratings for Chesapeake Energy Corp., Denbury Resources and Whiting Petroleum Corp., while giving Exxon and Chevron "negative" outlooks, the ratings agency said on Friday in a statement, Bloomberg reported.
Exxon “has substantially more debt than during the last cyclical commodity price trough in 2009, while upstream production and costs are at similar levels”, S&P analysts Thomas Watters and Carin Dehne-Kiley said.
Oil prices have fallen 58% from last year’s peak, threatening $1.5 trillion in North America energy investments, according to Wood Mackenzie Ltd. Oil has been stuck near $45 a barrel as US crude stockpiles stay about 100 million barrels above the five-year seasonal average and OPEC pumps at near-record levels.
Exxon is one of only three US industrial issuers to have a triple-A bond rating, along with Johnson & Johnson and Microsoft Corp. The oil company has held that grade from S&P since at least 1985, according to data compiled by Bloomberg.
The last US company to lose the triple-A designation from S&P, as well as Moody’s Investors Service, was Automatic Data Processing Inc., which was stripped of the ratings after spinning off its auto-dealer services unit in April 2014.
Chevron has been rated AA by S&P since at least July 1987, Bloomberg data show.
“Most rating actions reflect lower credit-protection measures, negative cash flow and uncertainty about liquidity over the next 12 months,” S&P said in the statement.


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