U.S. Oil Majors Downgraded by S&P on Climate Risk, Earnings

[catfish1957]

https://finance.yahoo.com/news/exxon-rating-lowered-one-notch-204003947.html

<snipit>
Exxon Mobil Corp., Chevron Corp. and ConocoPhillips had their credit ratings lowered after S&P Global Ratings followed through on its recent warning and revised the industry’s risk profile due to climate change and weak earnings.

The three oil and gas producers all had their ratings cut one notch, S&P said in separate statements, and comes two weeks after the ratings company published a sector-wide report on the challenges posed by climate change.

The ratings decisions reflect “growing risks from energy transition due to climate change and carbon/GHG emissions, weak industry profitability and greater expected volatility in hydrocarbon fundamentals,” S&P said Thursday.
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This is a new first  have I have not seen in my over 40 years of investing. The S & P has downgraded allmost an entire sector based on politically charged faux climate change. No doubt with (Biden) timing, this was a direct shot at these industries to hurt them financially.  Lowing their ratings,  hurts their balance sheet by forcing them to pay more interest on floated bonds, and reducing the overall value of existing issued bonds.   The perfect analogy is this would be like if Experian, Transunion and Equifax colluded to lower your credit score because you are a Trump voter.  And I don't buy off on the profitablity angle.  These are sound companies on the rebound, recoverying nicely after COVID-19 impact.

This is just another battle in the war.  If the left can bring the hydrocarbon industry to its knees, it can direct its folly of green energy to fruition.

[LMAO]

Americans better be prepared for not only high prices at the pump but heating and cooling costs

[Hoodat]

This is a new first  have I have not seen in my over 40 years of investing. The S & P has downgraded allmost an entire sector based on politically charged faux climate change. No doubt with (Biden) timing, this was a direct shot at these industries to hurt them financially.

Ridiculous move.  Chevron is looking strong.  With investment in finding future reserves bottoming out these past two years, Chevron has enough on hand to tap into when the price hits $100 again, which it will do under the Biden coup.  With Exxon having limited reserves, they are heavily invested in sustainable energy.  So they will also benefit from fascist control of our energy market.  Not really seeing how either is going to be affected by this S&P hit job.

[catfish1957]

Ridiculous move.  Chevron is looking strong.  With investment in finding future reserves bottoming out these past two years, Chevron has enough on hand to tap into when the price hits $100 again, which it will do under the Biden coup.  With Exxon having limited reserves, they are heavily invested in sustainable energy.  So they will also benefit from fascist control of our energy market. Not really seeing how either is going to be affected by this S&P hit job.

@Hoodat

Well, here is an example of how a faux S&P downgrade can  hit and impact  them.......   Say CVX (Chevron) wants to float a 30 year corporate bond, bond rating, and demand often dicatates what rate the company and its fidicary section decides those details.

Here is an arbitrary example.   CVX based on downgraded rating decides that based on that heightened perceived risk that it issues a $10B bond at A Rating at 3.25%, where same bond may have garnished a 3.0% rating if same bonds were rated AA. (Stronger credit rating)

Over a 30 year period, that 0.25% delta, will cost the company $750M over that 30 year period.  (Assuming bond is non-callable)

[Hoodat]

@Hoodat

Well, here is an example of how a faux S&P downgrade can  hit and impact  them.......   Say CVX (Chevron) wants to float a 30 year corporate bond, bond rating, and demand often dicatates what rate the company and its fidicary section decides those details.

Here is an arbitrary example.   CVX based on downgraded rating decides that based on that heightened perceived risk that it issues a $10B bond at A Rating at 3.25%, where same bond may have garnished a 3.0% rating if same bonds were rated AA. (Stronger credit rating)

Over a 30 year period, that 0.25% delta, will cost the company $750M over that 30 year period.  (Assuming bond is non-callable)

@catfish1957

Yeah, that part I get.  However, I don't see CVX in a position where they would need to borrow money.  With oil going up, so will their revenues.  (This of course is from a GOM mindset.  I don't know what is going on in California, West Texas, Angola, Nigeria, etc.)

[catfish1957]

Kind of a side note.   Oil touched $60/bbl for the first time since late in '19. 

The electric grid  debacle we are seeing in Texas and Germany right now, might be  opening some eyes that the envirowhacko agenda on wind and solar is rife with risk.  Ultra scorching heat, freezing turbines and snow covered panels aren't that great a supplemental energy source in those weather scenarios.

[Smokin Joe]

Americans better be prepared for not only high prices at the pump but heating and cooling costs

Thanks in part to the wonderful wisdom of the Biden administration, gasoline here is up 50 cents a gallon since he was "elected".

Downgrading an industry with soaring product prices is a bit ludicrous.

Downgrading it on the basis of nonsensical climate theory is insane.

Is there some way we can downgrade the financial sector for stupidity?

Or should theirs be the first power outages?

[catfish1957]

Or should theirs be the first power outages?

What we witnessed with the sleazy hedge fund industry a few weeks ago, is a lot more ubiquitous in the financal industry than anyone realizes.  Political pupetteers have massive amounts of power and leverage on the financial sector.  And ... there is no fix since the cops (FTC, FBI. et.al) are as much of the problem too.

[Smokin Joe]

What we witnessed with the sleazy hedge fund industry a few weeks ago, is a lot more ubiquitous in the financal industry than anyone realizes.  Political pupetteers have massive amounts of power and leverage on the financial sector.  And ... there is no fix since the cops (FTC, FBI. et.al) are as much of the problem too.

Understood.

It's hard trying to get people to understand that market factors which affect commodity prices are subject to the same sort of speculation that drives stock prices to ludicrous heights (pump and dump). It is likely that half of the price of oil at the peak during the booms we have every 20 year or so is speculators looking to resell contracts at a profit, the same people who dumped on COVID news (because they never had any intention of taking delivery) and took oil negative.

At the high end, entire industries can be tampered with (note Banks imposing political views on customers, especially the Firearms industry), others promoted, and the speculators getting rich off their offices in Washington D.C. (especially Congress, but others as well) have the power to supplement banking policies with public policy to their own benefit. This amounts to a huge conflict of interest in an industry which should be based on credit histories and fiscal merit, not on politics. So don't expect any relief from a legislative or regulatory standpoint.

[Fishrrman]

catfish wrote:
"The electric grid  debacle we are seeing in Texas and Germany right now, might be  opening some eyes that the envirowhacko agenda on wind and solar is rife with risk."

Are you joking?
It will only make them double down.
They'll tell you the systems in Texas are failing because "they didn't do it right the first time around"...

[IsailedawayfromFR]

Thanks in part to the wonderful wisdom of the Biden administration, gasoline here is up 50 cents a gallon since he was "elected".

Downgrading an industry with soaring product prices is a bit ludicrous.

Downgrading it on the basis of nonsensical climate theory is insane.

Is there some way we can downgrade the financial sector for stupidity?

Or should theirs be the first power outages?

And just think of all those hundreds and thousands of rail cars sliding along in blizzard conditions with crude and products when the same could have been moved via pipeline below ground and safe?

I wonder which is more environmentally sound?

[christian]

It hasn't bothered democrat socialist to rape the environment while proclaiming they are saving the environment.  That's been going on for many decades.  The down grading will continue in other sectors too.  As i have stated many times in many places, the democrats won't quit until America is a third world Country.  You're now seeing the snow ball rolling down the Mountain, just starting to pick up speed. As i've heard;  The tree of liberty needs frequent watering with the blood of traitors-enemies and patriots.  Simply, there is a price to be paid and sacrifices to be made as well, if you value freedoms.

[catfish1957]

And just think of all those hundreds and thousands of rail cars sliding along in blizzard conditions with crude and products when the same could have been moved via pipeline below ground and safe?

I wonder which is more environmentally sound?

It's all become part of the envirowhacko agenda.  Just think.... 10 years ago, natural gas was considered a "green" industry.  Bottom line...adjust  the rules to meet the narrative.

[Smokin Joe]

It's all become part of the envirowhacko agenda.  Just think.... 10 years ago, natural gas was considered a "green" industry.  Bottom line...adjust  the rules to meet the narrative.

More like "Move the Goalposts".

Remember, only envirowhackos would damage a pipeline in order to complain about it leaking.

[240B]

There is a reason the oil industry supported the Communist 'Green Energy' Coup.
Screw the S&P ratings, the price of oil is skyrocketing. Exactly as they knew it would.

[Smokin Joe]

There is a reason the oil industry supported the Communist 'Green Energy' Coup.
Screw the S&P ratings, the price of oil is skyrocketing. Exactly as they knew it would.

Some of the Majors were playing along with pond scum projects and the like, likely sucking up grant money and using the projects for ad material to show how 'green' they are...

It's typically the smaller and intermediate sized companies who get hit hardest by downturns, anyway, and S&P ratings affect those who might need more funding for CAPEX than the larger companies who can pull it from profits or assets.

[Idiot]

Just wait until oil goes up a bit more, then they'll want to hit us with a windfall profits tax. 

[Hoodat]

Just wait until oil goes up a bit more, then they'll want to hit us with a windfall profits tax.

Maybe they should hit Big Tech with a windfall profits tax.

[BassWrangler]

Kind of a side note.   Oil touched $60/bbl for the first time since late in '19. 

The electric grid  debacle we are seeing in Texas and Germany right now, might be  opening some eyes that the envirowhacko agenda on wind and solar is rife with risk.  Ultra scorching heat, freezing turbines and snow covered panels aren't that great a supplemental energy source in those weather scenarios.

One would hope, but I think for Texas that message is weakened a bit by the fact that they had natural gas plants go offline due to the cold (i.e. not just wind power was impacted).

[BassWrangler]

Maybe they should hit Big Tech with a windfall profits tax.

I'm generally a low taxes guy who feels that progressive tax rates are theft. But lately I've been thinking that it's unhealthy for Bezos, Musk, Gates, Zuckerberg, and these other bit-tech multi-billionaires to have all that money. They are using it to advance political agendas. That's too much power in too few hands.

[Smokin Joe]

Maybe they should hit Big Tech with a windfall profits tax.

(That'd be a windFAIL profits tax, don'tcha know)

[DefiantMassRINO]

Fossil fuels are a necessary component of a reliable electric grid.

What escapes mention by the lamestream liberal media is:

- the environmental destruction and polution caused by Lithium mining and disposal; Lithium is a heavy metal.

- the environmental destruction and species extinctions being caused by palm oil plantations to supply biofuels.

[Hoodat]

- the environmental destruction and polution caused by Lithium mining and disposal; Lithium is a heavy metal.

Uh, no.  Lithium is an alkali metal that is extracted from salt.  Density-wise, it may be the lightest metal there is.

[catfish1957]

Uh, no.  Lithium is an alkali metal that is extracted from salt.  Density-wise, it may be the lightest metal there is.

I think DefiantMassRINO's perspective of heavy metal is confined to Metallica and Iron Maiden.