(Alliance News) - Moody's Investors Service on Wednesday affirmed the Aa2 issuer rating of oil & gas company Royal Dutch Shell PLC.
The outlook on all ratings was changed to stable from negative, reflecting Moody's expectation that Shell's operating performance will improve materially in 2021-22 from the severe downturn in 2020 which was driven by weak oil and gas prices and demand dislocation caused by the global pandemic.
Moody's decision to affirm the Aa2 rating also incorporates the rating agency's assessment that Shell's updated strategy and its decision to lower its net debt and rebase the dividend will better enable the company to balance different priorities including restoring its strong financial profile, continued shareholder remuneration, ongoing investments into its core oil and gas operations and rising investment need for its low-carbon operations, in order to adjust the company's operations for the energy transition over the next few years.
"Stabilising the outlook on Shell's ratings reflects our expectation that the company's earnings and financial profile will recover to the levels required for the Aa2 rating in 2021. In addition to improving market conditions, Shell's measures to protect its cash flow generation and balance sheet initiated in 2020 support a sustainable recovery of its credit metrics over the next 12-18 months." said Sven Reinke, a Moody' senior vice president.
Shell 'A' shares closed 1.9% higher in London on Wednesday at 1,463.20 pence each, while 'B' shares closed up 1.5% at 1,388.80p each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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