Fitch cuts Marathon

Fitch Ratings said it downgraded Marathon Oil Corp.'s issuer default rating and associated ratings to BBB from BBB+, affirmed the company's short-term issuer default rating and commercial paper at F2 and revised the company's outlook to stable following the tax-free spin-off of Marathon Petroleum Corp. to shareholders.

Marathon's debt is currently rated as follows:

The main driver for the downgrade is the loss of earnings diversification, which follows the spin-off of the company's sizable portfolio of downstream and midstream assets to Marathon Petroleum, the agency said. Other credit issues include the potential for high capex/acquisitions to fast-track production and reserve growth and the impact of increased regulations in the deepwater Gulf of Mexico.

The concerns are balanced by the company's high exposure to liquids in the upstream, a very strong oil pricing environment, increased capex flexibility that should come with the shedding of Marathon Petroleum spending requirements and related liabilities and Marathon's ample liquidity, the agency said.

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