David Marino: Bloomberg.com:
1 February 2016
Standard & Poor’s lowered its rating on Royal Dutch Shell Plc and sees a significant likelihood of downgrades for several Europe-based integrated oil and gas majors in the next weeks.
“We lowered our ratings on Royal Dutch Shell Plc to ’A+/A-1’ from ’AA-/A-1+’ and placed the long-term rating on CreditWatch with negative implications,” S&P said in an e-mailed statement. “We also placed on CreditWatch negative our ratings on BP Plc, Eni SpA, Repsol S.A., Statoil ASA, Statoil Forsikring AS, Statoil US Holdings Inc., and Total S.A.”
S&P’s moves come after the ratings agency lowered its oil price assumption Jan. 12 for Brent crude down to $40 a barrel for 2016. The 52 percent average price drop in 2015 will not be matched by most companies’ cost and spending reductions, according to the statement.
“We now believe many major oil and gas companies’ current and prospective core debt coverage metrics are likely to remain below our rating guidelines for two or three years as the industry adjusts to lower prices,” S&P analysts said in the report.
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