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Rating Pressure On European Oil & Gas Majors Likely If Negative Free Cash Flow After Dividends Continues Into 2010 Mar 09
Standard & Poors, March 2009
Abstract
Standard & Poor's Ratings Services believes that the credit quality of European oil and gas majors will come under pressure if high capital expenditures and dividends are maintained in 2010, as this would entail debt increases in our credit scenario beyond the generally significant rises we already anticipate for 2009. We score these groups' business risk profiles as 'excellent' and financial risk profiles as 'minimal'. For more information on our approach to these factors, see 'Industrials' Business Risk/Financial Risk Matrix--A Fundamental Perspective On Corporate Ratings,' published April 7, 2005. Despite these strengths, rating headroom for these groups is now significantly lower, in our opinion, in light of anticipated major negative free cash flow after dividends in 2009 (see chart 1)....
Companies mentioned in this report are: BP PLC,Royal Dutch Shell PLC,Eni SpA,Total S.A.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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