Bloomberg.com: Shell Loses AAA Rating at Fitch; Rating Cut to AA+ (Update1)
April 21 (Bloomberg) -- Royal Dutch/Shell Group lost its top credit ratings from Fitch Ratings, its second credit downgrade after reducing oil and gas reserves by 22 percent and shuffling management.
Fitch cut its ratings one level to AA+ from AAA, the highest possible, the ratings company said in a statement. The ratings have a stable outlook and don't change Fitch's short-term ratings of F1+, Fitch's highest possible, said Isaac Xenitides, one of the analysts who handled the review. The move follows a downgrade to AA+ from AAA by Standard & Poor's on April 19.
The downgrades come after the resignation on March 3 of Shell Chairman Philip Watts, who was criticized by investors for missing growth targets and ran the exploration unit when some of the reserves were booked. Walter van de Vijver, his successor as head of that division, also stepped down. Chief Financial Officer Judith Boynton was replaced on April 19.
``The wholesale management change is unprecedented, there's a sea-change at the top and that's a time to bear down,'' Xenitides said in a telephone interview. ``Finding and development has underperformed over time. Going forward, all majors need to be very good at finding oil, that's their job.''
Shell slipped from Europe's largest oil company by market value to second after cutting oil and gas reserves on Jan. 9. Shell had been rated AAA by Moody's Investors Service and S&P for 14 years.
Shell, based in London and The Hague, on Jan. 9 said the company improperly recorded 20 percent of its reserves as proven, erasing 3.9 billion barrels worth more than $120 billion from its books. It has since cut its reserves twice more, by a total of 4.35 billion barrels, or 22 percent, to 15 billion barrels.
A downgrade thins the ranks of AAA-rated companies in Europe to just two: Nestle SA, the world's largest food company, whose ratings are also on watch for a downgrade, and drugmaker Novartis AG. Exxon Mobil Corp., the world's largest investor-owned energy company, becomes the only AAA-rated publicly traded energy company. Exxon has held the ratings since 1919.
S&P will keep its ratings on watch with ``negative implications,'' where it put the ratings after the first reserve adjustment on Jan. 9. The ratings could fall as low as AA- but probably no further, Emmanuel Dubois-Pelerin, the S&P managing director in Paris who handled the review, said on April 19.
Moody's, which has had its AAA ratings on watch for a downgrade since Jan. 9, hasn't released a decision yet.
Editors: Coulter, King
To contact the reporter on this story:
Alex Lawler in the London newsroom at alawler@bloomberg.net
To contact the reporter on this story:
Tom Cahill in Paris newsroom, or tcahill@bloomberg.net.
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