S&P Global Ratings on Feb. 11 cut the credit ratings of top U.S. oil producers Exxon Mobil Corp., Chevron Corp. and ConocoPhillips Co. by a notch, citing massive quarterly losses and the pressure to tackle climate change.
The ratings slipped to ‘AA-,’ weeks after the agency warned it was considering downgrades for 13 of the world's largest oil companies due to the rising risk from energy transition and volatile commodity prices.
Several oil companies posted billions of dollars in losses in 2020 after the COVID-19 pandemic brought global travel to a standstill, slashing fuel demand and sending crude prices to historic lows.
The sector is also under pressure from investors and pension funds demanding companies to disclose their carbon footprint and reduce greenhouse gas emissions by investing in renewable energy projects.
While companies including Exxon Mobil, Chevron and ConocoPhillips have announced steps to tackle climate change, S&P said it does not see those “providing material credit differentiation.”
Investors are also pressuring the companies to cut spending and focus on dividends and buybacks after the sector amassed massive debts to grow during shale oil’s golden era.
S&P has a ‘stable’ outlook on Chevron, widely considered to have the best restraint on spending. Exxon Mobil’s outlook is negative, meaning the ratings agency could downgrade its profile again.
Exxon Mobil last year slashed spending on new projects by nearly a third and outlined plans to cut up to 15% of its workforce, but its debt rose by $21 billion due to expenses and restructuring.
S&P expects Exxon Mobil to take more actions such as selling assets or further cutting its spending budget to manage its debt.
The facility will be located on 100 acres in Texas' Permian Basin and will capture up to 1 million metric tons of CO₂ from the atmosphere a year, Occidental Petroleum said in a joint statement with Rusheen Capital.
Oil and gas company Ophir Energy, which historically focused on Africa, has of late been concentrating on Asia, purchasing some assets from Australian peer Santos last year.
Australian oil and gas producer Senex Energy Ltd. (ASX: SXY) will start its Surat Basin natural gas drilling program next month after contracting oil and gas services provider Easternwell. Senex is a supplier of gas to Australia's east coast gas market.