Moody’s ups ConocoPhillips view to positive

Moody's Investors Service said it changed ConocoPhillips’ (COP) outlook to positive from negative and affirmed its Baa2 issuer and senior unsecured ratings, as well as all the other debt ratings at various ConocoPhillips-guaranteed subsidiaries.

The agency also affirmed the Prime-2 short-term commercial paper ratings of ConocoPhillips and ConocoPhillips Qatar Funding Ltd.

This action follows ConocoPhillips’ March 29 announcement that it agreed to sell its 50 percent non-operated interest in the Foster Creek Christina Lake (FCCL) oil sands partnership, as well as the majority of its western Canada Deep Basin natural gas assets to Cenovus Energy Inc. (Ba2 stable) for $13.3 billion. The transaction is expected to close in the second quarter.

"This large sale will enable COP to substantially and quickly reduce debt, lower overall operating costs, and reduce exposure to low-margin North American natural gas without materially impacting its operating cash flows in 2017," Moody's senior analyst Sajjad Alam said in a news release.

"While the FCCL assets represent a stable source of production with a very long reserve life, by reducing its exposure to SAGD oil sands, which sells at a considerable discount to WTI prices, COP will boost its overall price realizations, minimize price related reserves revision risk and have a more competitive asset portfolio in today's lower commodity price environment."

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