UPDATE: Fitch Increases Chances Of Cutting Anadarko To Junk

15th Jun 2010 23:50

(Updates with Transocean outlook cut, Halliburton rating affirmation, starting in sixth paragraph.) 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 last week lowered its outlook on the company to negative from stable, as Moody's Investors Service did the week before. As a nonoperating partner in the underwater 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. Later Tuesday, Fitch also revised its outlook on Transocean Ltd. (RIG, RIGN.EB) to negative because of the same cost worries, as well as concerns the market for deepwater drilling could weaken. The U.S. government currently has a six-month moratorium on Gulf deepwater drilling, and Fitch noted the potential for more bans in other international markets. Although Fitch continues to believe Transocean, which owned the sunken rig that started the spill, will be shielded from most of the spill's costs by BP PLC's (BP, BP.LN) liability, the tense politics surrounding the spill increase uncertainty about that assumption, the agency said. The agency currently rates Transocean at BBB, two notches into investment-grade status. Fitch also affirmed its ratings with a stable outlook on Halliburton Co. (HAL), which provided cementing services to the broken well. Earlier Tuesday, Fitch downgraded BP's 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 2.5% to $43.60 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. Transocean shares were down 1% at $48.05 after hours. It too has lost a lot of its value this year. -By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [email protected] (END) Dow Jones Newswires June 15, 2010 18:50 ET (22:50 GMT)