Fitch: BP view to negative

Fitch Ratings said it revised the outlook on BP plc’s long-term issuer default rating to negative from stable and affirmed the issuer default rating at A.

The outlook revision reflects an expectation that BP’s funds-from-operations adjusted net leverage is likely to exceed the guidance level of 2.5x in 2016 through 2019, reflecting expected cash outflows associated with the 2010 Macondo oil spill and lower oil prices, Fitch said.

The largest payment the company is currently facing is the Clean Water Act fine, which in the worst case could reach $13.7 billion, the agency said.

BP’s falling proved reserves as evidenced by the organic reserve replacement ratio consistently below 100% also have contributed to the negative outlook, Fitch said.

The ratings also consider the company’s strong business profile and sufficient liquidity accumulated to handle Macondo-related cash outflows, the agency said.

© 2015 Prospect News.
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