Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
07 Nov 2005
MOODY'S UPGRADES DEBT RATINGS OF CONOCOPHILLIPS TO A1 AND PRIME-1; MEREY SWEENY L.P. TO Baa2; OUTLOOK STABLE
New York, November 07, 2005 -- Moody's Investors Service upgraded ConocoPhillips's (COP)
senior long-term debt to A1 from A3 and its commercial paper to
Prime-1 from Prime-2, concluding a review announced
on August 3, 2005. The outlook for the ratings is stable.
Concurrently, Moody's upgraded the senior note rating of Merey
Sweeny LP from Baa3 to Baa2, with a stable outlook. COP ratings
upgraded include the issuer rating, debentures, notes,
revolving credit facilities, industrial revenues bonds and various
shelf registrations for COP and its guaranteed facilities. Also
upgraded with a stable outlook are the preferred stock of ConocoPhillips
Capital Trust II, to A3 from Baa2; and the pass-through
certificates of Conoco Phillips Company, to Aa3 from A2.
The rating upgrade reflects COP's operational success and growth
since the 2002 merger of Conoco and Phillips Petroleum. COP's
upstream scale and geographic diversification, and its refining
and marketing and mid-stream operations all place it very competitively
among the second tier of the top integrated oil companies. Since
the merger, COP has rationalized and re-positioned the upstream
and downstream asset base and reduced costs in the upstream to aim for
sustained production growth of about 3% p.a. from
identified sources. It also has consolidated its midstream investment
in Duke Energy Field Services (DEFS) in 2005 by investing to increase
its stake to 50%. In Moody's view, COP is well-positioned
for future international upstream growth, which will help mitigate
higher cost declining production in the U.S. and the North
Sea. COP has also made a major investment with high growth potential
in Russia via its 14.8% stake in LUKOIL (rated Ba1 senior
implied), at a cost to date of about $4.2 billion.
Since 2002, COP has used free cash flow and substantial cash from
asset sales to reduce total debt obligations by more than $11 billion
to current adjusted debt of $22.5 billion. These
debt obligations include on- and off-balance-sheet
debt, significant non-recourse JV debt, pension liabilities,
and guarantees. Moody's believes that COP has reduced its
financial leverage to the lower end of the range in which it plans to
manage its leverage position (debt ratio target TD/Cap 20%-25%),
although the company has indicated strong free cash generation could be
used for additional debt reduction. Beginning in 2005, COP
is also using free cash flow to repurchase its stock. However,
even with an orientation to shareholder rewards, the focus has been
largely on anti-dilution of stock options, and Moody's
believes the company will manage share repurchases relative to free cash
flow to prevent significant re-leveraging.
COP's financial performance has reached a record level in 2005.
Cash flow from operations reached $12.9 billion in the first
nine months of the year and the company should be able to fund its dividend,
capital spending, an increased investment in LUKOIL, and its
share repurchases from internal cash flow in 2005. COP also reduced
debt by $1.5 billion during that period. COP's
liquidity position is strong, including $2.8 billion
of cash at 9/30/05.
COP's oil and gas production, excluding its equity share of
LUKOIL's production, has been relatively flat in 2005.
However, the company has identified a roster of development projects,
including integrated gas projects that should support production growth
of 3% p.a. over the medium-term. A
risk for the company will be its ability to sustain production growth
if any significant development projects are delayed for operational or
political risk reasons. COP's proved reserves and production
base will remain concentrated in mature areas such as North America and
the North Sea for the foreseeable future which, while favorable
from a political risk perspective, also presents challenges to production
growth and cost structure.
COP's cash production costs and finding and development costs are
competitive with its major upstream competitors'. However,
upstream unit costs will be under pressure given its mature legacy positions
and the external inflation pressures confronting the industry as a whole.
COP is also building up its investment in the integrated LNG gas value
chain. At this juncture it trails its largest integrated peers
in this area, and the investment both in integrated projects and
U.S. re-gasification faces long-term spending
cycles, commercial challenges, political risk, and environmental
opposition. Moody's also believes that while COP plans to
maintain a conservative balance sheet, international expansion could
lead to leverage increases via non-recourse debt in significant
COP has largely repositioned its upstream asset base since the merger
and embarked on a significant investment in LUKOIL. Despite substantial
political risk, LUKOIL presents large opportunities in Russia and
further diversification in the international growth portfolio.
While acquisition event risk is a potential concern, it is mitigated
by management's view that it does not need to make acquisitions
given its current reserve position and internal investment opportunities.
Moreover, strong cash liquidity and COP's reduced financial
leverage mitigate the risk that large transactions would negatively affect
its credit ratings.
Moody's is maintaining a stable outlook for COP's long-term
A1 rating. Under reasonable pricing scenarios, COP should
continue to be a strong free cash generator and, as noted,
the scale of COP's operations and conservative financial targets,
as well as many of its financial/reserve metrics, align with those
of higher-rated integrated peer companies. Further upside
in the long-term rating may emerge as Moody's monitors COP's
financial and operating performance for greater visibility on reserve
replacement and cost structure trends, on the level of debt and
sustainability of leverage reductions, and on progress with its
investment in LUKOIL investment, as well as acquisition event risk.
In a related rating action, Moody's upgraded to Baa2 from
Baa3 the senior notes of Merey Sweeny LP, a delayed coking project
finance owned 50% by COP. However, MSLP's debt
is non-recourse to the partners. The upgrade is based on
Merey Sweeny's strong operating tie-in to COP's 275,000
bpd refinery in Sweeny, Texas, on partner structural supports
that put an effective floor on MSLP's debt service coverage,
and on COP's strong motivation to support the project in the event
of financial or operating problems. The rating outlook is stable.
PDVSA (B2 foreign currency debt) is the 50% partner in MSLP.
Its several, not joint, support obligations as well as the
single asset nature of the project constrain further upside rating potential.
CononcoPhillips, a major integrated oil company, is headquartered
in Houston, Texas. Merey Sweeny LP is sited at COP's
large refinery complex at Sweeny, Texas.
Corporate Finance Group
Moody's Investors Service
Thomas S. Coleman
Senior Vice President
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.