Fitch Ratings Agency stated that weak oil prices in 2016 will leave five out of seven large oil companies with financial leverage above the required level, the Offshore Support Journal reported citing Fitch’s recent statement. According to Fitch, “one such year is unlikely to result in negative rating action, but a slow recovery in oil prices would mean several companies would have to take very significant steps if their credit profiles are to become appropriate for their current ratings by 2018.”
Fitch said that Total company needs to make the sharpest cuts in its investments – of up to 49% and in shareholder returns. among all oil majors in Europe, to maintain its rating profile by 2018, if crude prices remain low, wrote Seeking Alpha. Total has projected cuts in capital spending to between $20b to $21b, down from $23b to $24b in 2015, however, Fitch insists that the fall must be larger – by more than 30% – to keep the company’s AA rating.