Fitch Downgrades BP on Oil Price, Spill
Ratings agency Fitch on Monday downgraded its outlook on BP's long-term issuer default rating (IDR) to negative from stable citing a possible rise in debt as a result of lower crude prices and liabilities over the 2010 Gulf of Mexico oil spill.
It affirmed BP's IDR at 'A' to reflect "the company's strong business profile and sufficient liquidity accumulated to handle Macondo-related cash outflows."
The Macondo Prospect was the oilfield in the Gulf of Mexico where BP's Deepwater Horizon drilling rig exploded in April 2010.
The company faces up to $13.7 billion in fines over the 2010 blast in which 11 people died and created the largest offshore oil spill in U.S. history.
"BP's flexibility in responding to low oil prices is constrained by already high leverage and a need to preserve cash in front of still uncertain Macondo-related liabilities," Fitch
said.
BP has spent more than $35 billion in clean-up costs and liabilities related to the spill.
Benchmark oil prices have fallen by nearly half over the past year, weighing heavily on the oil and gas industry and forcing companies to slash budgets and increase debt.
BP has lowered its 2015 capital expenditure by at least 13 percent to $20 billion but has maintained its dividend payment unchanged.
Reporting by Ron Bousso