Moody's affirms ExxonMobil's ratings, but risks on horizon

By Ovunc Kutlu

ISTANBUL (AA) - Moody's announced Friday it affirmed ExxonMobil's Aa2 ratings with a stable outlook, but said the US' biggest energy company faces some risks in the following years.

"ExxonMobil maintains a strong and resilient credit profile, led by its world-class upstream and refining operations, competitive and improving cost structures, resilient cash flow generation and its immense cash position," Moody's senior credit officer John Thieroff said in a statement.

Moody's said Exxon's rating is supported by its very large scale and global diversification across a fully integrated hydrocarbon value chain, while the company's upstream production and proved reserves remain large relative to its peers and it benefits from a strong position in liquified natural gas.

Exxon's recently completed $64.5 billion acquisition of Pioneer Natural Resources more than doubles the company's production in the shale oil-rich Permian Basin located in west Texas, making it the largest producer in the basin by a wide margin, according to the agency.

"ExxonMobil is also one of the world's largest petroleum refiners and petrochemical producers," it noted.

ExxonMobil, however, faces "substantial transition and political risks" as a very large and globally integrated oil company, according to the agency.

Policy risk around climate change, tightening regulations and rising fiscal pressures present "significant and growing challenges" to the company's operations into the next decade, said the statement.

"Moody's Ratings views ExxonMobil's business risk as increasing and that profitability and cash flow will become more volatile over time as future energy demand gradually shifts toward less carbon intensive energy sources," it added.

The agency noted that the company's rating could be downgraded if it fails to address the challenges of carbon transition.