Fitch Ratings has assigned an 'A' to ConocoPhillips Corporation's (COP)
proposed issuance of up to $1.5 billion in senior unsecured five-, 10-,
and 30-year notes. Net proceeds from the offering will be used to
refinance existing commercial paper (CP) balances and for general
corporate purposes.
ConocoPhillips' current ratings are as follows:
--Issuer Default Rating (IDR) 'A';
--Senior Unsecured Notes 'A';
--Bank Revolver 'A';
--Term Loan 'A'.
ConocoPhillips Qatar Funding
--CP 'F1'.
Burlington Resources,
--Senior unsecured 'A'.
Polar Tankers, Inc.
--IDR 'A'.
ConocoPhillips
--CP 'F1'.
--Short term IDR 'F1'.
ConocoPhillips Co.
--IDR 'A'.
--Sr. notes 'A'.
The Rating Outlook is Stable. At the end of first-quarter 2008,
ConocoPhillips' total balance sheet debt had decreased to $21.5 billion,
down approximately one-third from the $31.8 billion seen following the
Burlington Resources acquisition. Debt-to-capitalization stood at 19%.
For the year ending Dec. 31, 2007, ConocoPhillips generated free cash
flow of $10 billion, driven by surging commodity prices, favorable
working capital changes and a lighter capex schedule relative to 2006.
ConocoPhillips' operational performance remains strong. In 2007, total
reserves including affiliates were 10.56 billion boe (barrels of oil
equivalent), of which 72% were proved developed. Debt/boe of proven
reserves was $2.05/boe, three-year FD&A (Finding, Development, &
Acquisition Costs) costs were $11.92/boe, and the company had an R/P
(reserves-to-production) ratio of 12.3x, according to Fitch
calculations. The company's assets have also grown substantially,
improving debt service capacity. Total assets stood at $177.8 billion,
including $29.4 billion in goodwill.
ConocoPhillips' ratings are supported by its size, strong cash flow
generation, and the diversification created by its integrated business
model. Offsetting factors include concerns about the company's
significant leverage to natural gas in North America, the political risk
associated with its LUKOIL investment in the former Soviet Union, and
the company's share buyback program. Looking forward, Fitch expects the
stock buyback program will be managed prudently, particularly in the
event of an unexpected decline in commodity prices.
ConocoPhillips is a large integrated oil company with a presence in just
under 40 countries. Worldwide, it has the sixth largest proven reserves
and fifth largest portfolio of refining assets, excluding national oil
companies. In 2007 consolidated E&P production was 1.86 million barrels
per day (bpd), and consolidated reserves (excluding equity affiliates)
were 7.61 boe. Including equity affiliates but excluding LUKOIL, total
proven reserves were 10.56 billion boe. ConocoPhillips also owns and
operates approximately 2.7 million bpd of refining capacity. Other
business segments include Midstream, Chemicals, Emerging Businesses, as
well as the company's approximately 20% stake in LUKOIL. At Dec. 31,
2007, ConocoPhillips had 32,600 employees worldwide.
Fitch's rating definitions and the terms of use of such ratings are
available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality, conflicts
of interest, affiliate firewall, compliance and other relevant policies
and procedures are also available from the 'Code of Conduct' section of
this site.
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