S&P downgrades 10 U.S. oil companies

The credit ratings of 10 U.S. oil and gas exploration and production companies were downgraded on Tuesday by Standard and Poor’s Ratings Services, citing weak oil prices and the global market rout.

Companies downgraded by one notch include: Continental Resources Inc., Devon Energy Corp, EOG Resources, Hess Corp., Apache Corp., Hunt Oil Co., Marathon Oil Corp, and Southwestern Energy Co.

Chevron Corp, the second-largest energy company in the U.S. in terms of revenue, had its corporate credit rating slashed by one notch to AA- on increased risks, S&P said in a statement. The company recently announced it was readying for more layoffs after revealing plans to cut capital spending in 2016 by 24 percent.

Meanwhile, oil giant Exxon Mobil Corp was placed on watch by S&P with negative implications due to a weak outlook on its credit measures.

U.S. oil companies, particularly shale drillers, have been hit hard over the past two years as oil prices continued to slump and OPEC, led by Saudi Arabia, continued to pump more oil to maintain its market share and dial up the pressure on non-member producers.

“We expect that many of these companies will continue to lower capital spending and focus on efficiencies and drilling core properties. However, these actions, for the most part, are insufficient to stem the meaningful deterioration expected in credit measures over the next few years," S&P said.

On Wednesday, Brent Crude, the key benchmark for half of the world’s oil exporters, fell 0.83 percent to $32.45 as hopes of production cuts faded. WTI crude fell below the crucial $30-mark to $29.69.

Write to Reem Abdellatif at reem.a@argaam.com