NOTE:On February 23, 2017, the press release was revised as follows: In the REGULATORY DISCLOSURES section, removed the following disclosure: “Moody's considers a rated entity or its agent(s) to be participating when it maintains an overall relationship with Moody's. On this basis Statoil ASA or its agents are considered to be participating entities. This rated entity or its agents generally provide Moody's with information for their ratings process.” Revised release follows.
London, 22 January 2016 -- Moody's Investors Service (Moody's) placed on review for downgrade
the ratings of EBN B.V., Royal Dutch Shell Plc,
Total S.A., Statoil ASA and their respective subsidiaries.
Also on review for downgrade are Motiva Enterprises LLC and Deer Park
Refining LP, two US-based refining joint ventures closely
linked to Royal Dutch Shell. The list of the companies and rating
actions appears below.
RATINGS RATIONALE
Oil prices have deteriorated substantially in the past few weeks and have
reached nominal price lows not seen in more than a decade. Moody's
has adjusted its view downward for the likely range of prices.
We see a substantial risk that prices may recover much more slowly over
the medium term than many companies expect, as well as a risk that
prices might fall further. Even under a scenario with a modest
recovery from current prices, producing companies will experience
much lower cash flows. Today's review for downgrade considers
that much weaker industry fundamentals have potential to warrant rating
changes for all companies covered in this press release.
As part of its ongoing assessment of energy markets, Moody's
sharply reduced its oil price assumptions on January 21 in light of continuing
oversupply in the global oil markets and demand growth that remains tepid.
Iran is poised to soon add 500,000 to 1,000,000 barrels
per day to global supply. OPEC and many non-OPEC oil producers
continue to produce without restraint as they battle for market share,
and the addition of Iranian oil to the market this year will offset or
exceed expected declines in US production of about 500,000 barrels
per day. Increased production vastly exceeds growth in oil consumption,
given modest growth in consumption from major consumers such as China,
India and the US. Production now exceeds demand by about 2 million
barrels per day, adding to already high global oil stocks.
Lower oil and gas prices will further weaken cash flows for exploration
and production companies, like EBN, and the upstream portion
of integrated companies. This will cause further deterioration
in financial ratios, including deeper negative free cash flow.
Most companies are unable to internally fund capital spending at current
market prices. Current industry conditions also reduce the value
of assets offered for sale and have made accessing capital markets more
expensive. While integrated oil and gas companies benefit from
the profitability of their downstream operations, the upstream operations
represent a much larger part of the capital employed and cash flow for
most of these companies.
This ratings review will focus on cost structure and returns, as
well as management's strategy for coping with a prolonged downturn.
The review will assess cash flow and credit metrics under our latest price
assumptions, liquidity profile, debt maturity profile and
financing needs, capital spending requirements, and relative
rating positioning. For the refining joint ventures, which
are 50% indirectly owned by Royal Dutch Shell but operate as standalone
entities, the review is less driven by commodity price risk impacts,
and instead will focus on their strategic importance and the degree of
uplift derived from shareholder support, and whether the notching
of their ratings needs to be adjusted in the event Royal Dutch Shell is
downgraded.
Moody's expects to conclude a majority of the reviews by the end
of the first quarter.
List of affected ratings:
On Review for Downgrade:
..Issuer: EBN B.V.
.... Issuer Rating, Placed on Review
for Downgrade, currently Aaa
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Aaa
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aaa
..Issuer: Statoil ASA
....BACKED Senior Unsecured Medium-Term
Note Program, Placed on Review for Downgrade, currently (P)Aa2
....BACKED Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aa2
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aa2
....BACKED Senior Unsecured Shelf, Placed
on Review for Downgrade, currently (P)Aa2
..Issuer: Total Capital
....BACKED Senior Unsecured Medium-Term
Note Program, Placed on Review for Downgrade, currently (P)Aa1
....BACKED Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aa1
....BACKED Senior Unsecured Shelf, Placed
on Review for Downgrade, currently (P)Aa1
..Issuer: Total Capital Canada Ltd.
....BACKED Senior Unsecured Medium-Term
Note Program, Placed on Review for Downgrade, currently (P)Aa1
....BACKED Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aa1
..Issuer: Total Capital International
....BACKED Senior Unsecured Medium-Term
Note Program, Placed on Review for Downgrade, currently (P)Aa1
....BACKED Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aa1
..Issuer: TOTAL S.A.
....Junior Subordinated Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aa3
....Senior Unsecured Conv./Exch.
Bond/Debenture, Placed on Review for Downgrade, currently
Aa1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Aa1
....Senior Unsecured Shelf, Placed on
Review for Downgrade, currently (P)Aa1
.BACKED Senior Unsecured Revenue Bonds supported by Total
S.A., Placed on Review for Downgrade, currently
Aa1
..Issuer: Royal Dutch Shell Plc
.... Issuer Rating, Placed on Review
for Downgrade, currently Aa1
....Senior Unsecured Medium-Term Note
Program, Placed on Review for Downgrade, currently (P)Aa1
..Issuer: Shell Energy North America (US), L.P.
.... Issuer Rating, Placed on Review
for Downgrade, currently A2
..Issuer: Shell Finance (Netherlands) B.V.
.... Issuer Rating, Placed on Review
for Downgrade, currently Aa1
..Issuer: Shell International Finance B.V.
....BACKED Senior Unsecured Medium-Term
Note Program, Placed on Review for Downgrade, currently (P)Aa1
....BACKED Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aa1
..Issuer: Shell Oil Company
.... Issuer Rating, Placed on Review
for Downgrade, currently Aa2
....BACKED Revenue Bonds supported by Shell
Oil Company, Placed on Review for Downgrade, currently Aa2
....BACKED Senior Unsecured Revenue Bonds
supported by Shell Oil Company, Placed on Review for Downgrade,
currently Aa2
..Issuer: Deer Park Refining Limited Partnership
....BACKED Senior Unsecured Commercial Paper,
Placed on Review for Downgrade, currently P-1
....BACKED Senior Unsecured Revenue Bonds
supported by Deer Park Refining Limited Partnership, Placed on Review
for Downgrade, currently A2
....BACKED Senior Unsecured Revenue Bonds
supported by Deer Park Refining Limited Partnership, Placed on Review
for Downgrade, currently P-1
..Issuer: Motiva Enterprises LLC
....Senior Unsecured Commercial Paper,
Placed on Review for Downgrade, currently P-1
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently A2
....BACKED Senior Unsecured Revenue Bonds
supported by Motiva Enterprises LLC, Placed on Review for Downgrade,
currently A2
....BACKED Senior Unsecured Revenue Bonds
supported by Motiva Enterprises LLC, Placed on Review for Downgrade,
currently P-1
Affirmations:
..Issuer: EBN B.V.
....Senior Unsecured Commercial Paper,
Affirmed P-1
..Issuer: Statoil ASA
....Senior Unsecured Commercial Paper,
Affirmed P-1
....BACKED Senior Unsecured Medium-Term
Note Program, Affirmed (P)P-1
..Issuer: Total Capital
....BACKED Senior Unsecured Commercial Paper,
Affirmed P-1
....BACKED Senior Unsecured Medium-Term
Note Program, Affirmed (P)P-1
..Issuer: Total Capital Canada Ltd.
....BACKED Senior Unsecured Commercial Paper,
Affirmed P-1
....BACKED Senior Unsecured Medium-Term
Note Program, Affirmed (P)P-1
..Issuer: Total Capital International
....BACKED Senior Unsecured Medium-Term
Note Program, Affirmed (P)P-1
..Issuer: TOTAL S.A.
....Senior Unsecured Commercial Paper,
Affirmed P-1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)P-1
.BACKED Senior Unsecured Revenue Bonds supported by Total
S.A., Affirmed P-1
.BACKED Senior Unsecured Revenue Bonds supported by Total
S.A., Affirmed VMIG 1
..Issuer: Royal Dutch Shell Plc
....Senior Unsecured Commercial Paper,
Affirmed P-1
..Issuer: Shell International Finance B.V.
....BACKED Senior Unsecured Commercial Paper,
Affirmed P-1
....BACKED Senior Unsecured Medium-Term
Note Program, Affirmed (P)P-1
..Issuer: Shell Oil Company
....BACKED Revenue Bonds supported by Shell
Oil Company, Affirmed VMIG 1
....BACKED Senior Unsecured Revenue Bonds
supported by Shell Oil Company, Affirmed VMIG 1
Outlook Actions:
..Issuer: EBN B.V.
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Statoil ASA
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Total Capital
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Total Capital Canada Ltd.
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Total Capital International
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: TOTAL S.A.
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Royal Dutch Shell Plc
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Shell Energy North America (US), L.P.
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Shell Finance (Netherlands) B.V.
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Shell International Finance B.V.
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Shell Oil Company
....Outlook, Changed To Rating Under
Review From Negative
..Issuer: Deer Park Refining Limited Partnership
....Outlook, Changed To Rating Under
Review From Stable
..Issuer: Motiva Enterprises LLC
....Outlook, Changed To Rating Under
Review From Stable
The principal methodology used in rating Royal Dutch Shell Plc,
Shell Oil Company, Shell Energy North America (US), L.P.,
Shell Finance (Netherlands) B.V., Shell International
Finance B.V., Statoil ASA, TOTAL S.A,
Total Capital, Total Capital Canada Ltd. and Total Capital
International was Global Integrated Oil & Gas Industry published in
April 2014.
The principal methodology used in rating EBN B.V was Global Independent
Exploration and Production Industry published in December 2011.
The principal methodology used in rating Motiva Enterprises LLC and Deer
Park Refining Limited Partnership was Refining and Marketing Industry
published in August 2015.
Please see the Credit Policy page on www.moodys.com for
a copy of these methodologies.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Thomas S. Coleman
Senior Vice President
Corporate Finance Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Anke Richter
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
