Santos has had its credit rating cut to BBB- from BBB by Standard & Poor’s. The rating is the lowest investment grade rating and one notch above junk bond status.
The move has been expected for some time as Santos battles with a plunging oil price and revenues that have fallen by around 20%. The company revealed late last year that the Brent oil price assumptions it was using for asset valuations was USD$90 per barrel. It also disclosed in November, when it raised $2.5 billion in additional capital, that a USD$15 reduction in its long term oil price assumption would impair its assets values by $USD3.4 billion before tax. With the oil price trading around $30 a barrel, the pain could be around for some time to come.