S&P lowers BP, Total, Statoil

Standard & Poor’s said it lowered the ratings on three parent companies of major Europe-based integrated oil and gas groups as part of the agency’s review of the sector.

Specifically, S&P said it:

• Lowered the long- and short-term corporate credit ratings on BP plc to A-/A-2 from A/A-1 and assigned a stable outlook;

• Lowered the long- and short-term corporate credit ratings on Total SA to A+/A-1 from AA-/A-1+ and assigned a negative outlook; and

• Lowered the long- and short-term corporate credit ratings on Statoil ASA to A+/A-1 from AA-/A-1+ and assigned a stable outlook.

S&P also lowered the long-term ratings on captive insurer Statoil Forsikring AS to A from A+. The outlook on both entities is stable.

S&P removed all above ratings from CreditWatch negative, where S&P had placed them on Feb. 1.

The downgrades reflect the oil majors’ persistently weak debt coverage measures over 2015-2017 in particular, and meaningful negative discretionary cash flow after capital expenditures and dividends, S&P said in a news release.

“We note however that Statoil had a much stronger ratio of funds from operations (FFO) to debt in 2015 than BP, Total, or Shell at about 60%, commensurate with its prior rating,” the agency said.

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