Fitch Increases Likelihood Of Cutting Anadarko To Junk

15th Jun 2010 23:14

DOW JONES NEWSWIRES Fitch Ratings became the last of the three major credit raters to cut its outlook on Anadarko Petroleum Corp. (APC) to negative because of increasing costs from the massive oil spill in the Gulf of Mexico. Standards & Poor's Ratings Services lowered its outlook last week on the company to negative from stable, and Moody's Investors Service did so the week before. As a nonoperating partner in the sunken well, which is still gushing thousands of barrels of oil daily, Anadarko could potentially owe a 25% share of the containment and cleanup costs associated with the spill, as well as compensatory economic damages. The share reflects its 25% nonoperating working interest in the well where the Deepwater Horizon drilling rig exploded and sank in April. Fitch said the negative outlook reflects the possibility that those costs could greatly exceed Fitch's current estimates. Currently, it believes Anadarko has the capacity to cover its requirements even if it does have to pay a full 25% of the costs and still remain investment grade. It doesn't expect the company to sustain any punitive damages. Fitch also affirmed its rating on Anadarko at BBB-, the final rung before junk. Earlier Tuesday, Fitch also downgraded BP PLC's (BP, BP.LN) rating to just above junk, a steep six-notch cut, because of the oil spill's costs. Some lawmakers are pushing the company to set aside $20 billion to cover future cleanup costs as well as claims by tourism and fishing businesses harmed by the spill. Anadarko shares traded down 2.3% to $43.69 after hours, reversing a strong climb during the regular session. Through the close, the stock has lost 28% of its value this year so far, much worse than the broader market. -By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [email protected] (END) Dow Jones Newswires June 15, 2010 18:14 ET (22:14 GMT)