Fitch Ratings has affirmed the long-term Issuer Default Rating (IDR) for Anadarko Petroleum Corp. (NYSE: APC) at “BBB.” Anadarko's short-term IDR and commercial paper rating has been downgraded to “F3” from “F2.” The company’s rating outlook has been revised from Stable to Negative.
Approximately $12.7 billion of debt, excluding non-recourse debt at Western Gas Partners (NYSE: WES), is affected by this March 11 rating action.
Fitch Ratings commented, “Ratings for APC are supported by the company's significant production scale, demonstrated asset quality, strong track record as a quality upstream operator, adequate liquidity position, and successful history of asset development and monetization. The Negative Outlook is driven primarily by changes to Fitch's oil and gas price deck which lead to lower cash flow expectations and increases in near-term leverage forecasts, as well as moderate risks related to the refinancing of 2017 debt maturities and execution on potential asset sales.
“Fitch believes that APC has sufficient liquidity, financial flexibility, market access, and potential asset monetizations to support operations and maintain an investment-grade profile through 2018, when Fitch expects a sufficient recovery in commodity prices to support the rating at an investment-grade level. Reductions in gross debt are not modeled into Fitch's base case projections, but would be a strong support for the rating if funded with asset sale proceeds or in an otherwise creditor-friendly manner. Fitch recognizes that Anadarko has a significant pipeline of saleable assets that could bolster liquidity and/or reduce gross debt. However, the timing of sales and use of proceeds will have to be evaluated in the context of prevailing commodity price expectations in order to determine credit quality and ratings impact. Anadarko's strong track record regarding asset sales also provides support for the rating.”