S&P downgrades ratings of Chevron, Exxon, ConocoPhillips
Exxon Mobil Corp., Chevron Corp., and ConocoPhillips had their credit ratings lowered after S&P Global Ratings followed through on its recent warning and revised the industry’s risk profile due to climate change and weak earnings, Report informs, referring to Bloomberg.
The three oil and gas producers all had their ratings cut one notch, S&P said in separate statements and comes two weeks after the ratings company published a sector-wide report on the challenges posed by climate change.
The decisions reflect ‘growing risks from energy transition due to climate change and carbon/GHG emissions, weak industry profitability and greater expected volatility in hydrocarbon fundamentals,’ S&P said Feb. 11.
The industry has taken several steps to work through the energy transition, but ‘we don’t see these strategies as providing material credit differentiation,’ S&P said. Stricter regulation and shifting demand patterns ‘will contribute to a more difficult operating environment for fossil fuel producers and will likely augment the risk of stranded assets and significant asset write-downs.’
S&P cut Exxon’s long-term rating to AA- from AA with a negative outlook. Chevron was lowered to AA- from AA with a stable outlook. Conoco was reduced to A- from A with a stable outlook.