Elephant Stirring:Fossil Fuel’s Stranded Assetts Issue Looming
February 8, 2016
Standard & Poor’s Ratings Services on Tuesday cut the ratings of 10 U.S. oil and gas exploration and production companies, citing the sharp drop in crude oil prices.
Chevron Corp., the second-largest U.S. energy company by revenue, was among the companies that had their credit ratings cut. Its corporate credit rating was cut one notch to double-A-negative.
On Friday, Chevron said it would lay off workers and slash more than $9 billion in capital spending this year after reporting it had swung to a fourth-quarter loss.
Other companies that saw their ratings cut by one notch are: Apache Corp., Continental Resources Inc., Devon Energy Corp., EOG Resources Inc., Hess Corp., Hunt Oil Co., Marathon Oil Corp., Murphy Oil Corp. and Southwestern Energy Co.
Norway’s huge sovereign wealth fund, the world’s biggest, has sold out of 73 companies in the past year because their social or environmental policies could hurt profitability.
The Norwegian state pension fund’s annual report relating to “responsible investment” did not give the names of companies, but it indicated that most were coal or energy companies using coal, as well as those involved in mining, producing cement and heavy construction.
“We want to measure the risk in our investments,” said the head of the fund, Yngve Slyngstad, in a statement on Thursday.
“We expect companies to communicate the impact of their activities on the environment and the factors that could affect their long-term profitability,” he said.
The fund is currently worth around $794bn (£545bn), equivalent to around six annual budgets or more than $153,000 for each of the country’s 5.2 million inhabitants.
Fuelled from Norway’s huge oil and gas revenues, the fund is intended to pay for future generations in the welfare-state after the country’s wells run dry.
Over the past four years it has divested from 187 companies. Those decisions were made for financial reasons, which increasingly take into account social and environmental activities by the company and their impact on profit.