S&P warns BHP oil and gas exit threatens its credit rating

S&P warns BHP oil and gas exit threatens its credit rating

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S&P Global has warned BHP that the miner’s decision to sell its oil and gas business could threaten its credit rating, since it will leave the group even more reliant on iron ore.

The rating agency said it could lower its rating on BHP by up to two notches in the coming months as the loss of the petroleum unit would result in a “less diversified portfolio”.

The warning follows BHP’s announcement last week that it will sell the business to Australia’s Woodside Petroleum in exchange for shares that will be distributed to investors. BHP, which also unveiled plans to shift its primary stock market listing to Australia, said it would put the miner in a better position to focus on commodities that would benefit from a global transition away from fossil fuels towards clean energy.

But S&P said BHP’s expansion into potash, a fertiliser, as well as increased focus on nickel and copper “are likely to have a modest impact in the short to medium term”, adding that the group’s portfolio may become “slightly less diversified” than some of its peers such as Rio Tinto, Glencore