S&P ups Occidental

S&P said it upgraded the ratings on Occidental Petroleum Corp. and its debt to BB from BB-. The recovery rating (50%-70% recovery) on the company's unsecured debt remains 3, though the agency revised the rounded recovery estimate to 60% from 50%.

“OXY's leverage profile has significantly improved, and we expect management to continue prioritizing debt reduction. We are anticipating average FFO/debt of almost 20% with debt/EBITDA around 4x, which has improved based on our latest oil and gas price forecast as well as the company's recent tender for more than $3 billion of its notes maturing through 2026. OXY has now retired more than $12 billion of debt since acquiring Anadarko, and we expect debt reduction to remain a priority with another $2 billion of debt that may be redeemable heading into 2022,” the agency said in a press release.

S&P noted the company’s $5 billion revolver is undrawn and recently added a $400 million receivables securitization facility, which remains unused, and it expects management will consider extending its revolving credit facility, which is currently set to expire in early 2023.

The outlook is stable.

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