S&P upgrades Marathon Oil

S&P said it raised the short-term and commercial-paper ratings on Marathon Oil Corp. to A-2 from A-3.

The agency also said it raised the issuer credit and senior unsecured debt ratings to BBB from BBB- on an expectation of continued strong financial performance, limited negative cash flows, and maintenance of its modest financial policy, backed by a well-diversified portfolio of oil and gas reserves with good growth prospects.

The outlook is stable, reflecting a forecast that Marathon's credit measures will be well within expectations for the rating over the next two years based on the stable commodity price assumptions.

Marathon Oil is expected to maintain a modest financial policy, including break-even to positive cash flow generation after dividends, S&P said.

Marathon's asset retirement obligation should significantly decline following the sale of its U.K. business, supporting sustainably improved financial performance, the agency said.

S&P said it expect funds from operations-to-debt to remain comfortably higher than 50% under base-case assumptions, including the potential for modest crude oil price volatility.

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