Rating agency Moody’s said on May 28 that the credit risk of major oil producers has increased with recent events including Royal Dutch Shell Plc losing a Dutch climate lawsuit this week and Exxon Mobil Corp. losing a battle with shareholders.
Chevron Corp. also lost a vote to shareholders demanding it cut emissions further.
“These actions represent a substantial shift in the landscape for oil companies, which had previously prevailed in courts, and largely fend off significant shareholder votes, on climate related matters,” Moody's said.
Moody’s said it considered Exxon Mobil losing board members to an activist hedge fund over its energy transition strategy the most important development because it “likely presages similar results in future board elections at other U.S. oil companies.”
“The increasing potential for ever more stringent investor climate- and emissions-related investment thresholds are likely to lead to higher capital costs and diminished access to capital for oil companies that do not keep pace with investors’ expectations for transitioning to a low carbon business model.”
Daniel Rice, former CEO of Rice Energy who now sits on the EQT board, addressed the elephant in the room earlier this month at Hart Energy’s Energy Capital Conference.
E&Ps are metamorphosing from ravenous, capital-consuming caterpillars to value-oriented, cash-flowing butterflies. But will that be enough for investors?
The energy industry is experiencing great volatility as we enter the third decade of the millennium.