Moody's see unprecedented oil spill crisis, impact
The worst oil spill in U.S. history has created an unprecedented financial, legal, regulatory and environmental crisis for companies that operate in the Gulf of Mexico, Moody's Investors Service said on Monday.
"The accident could have an international impact as well, as other governments that oversee offshore production adopt these new, stricter U.S. standards," Moody's said in a report.
"We believe it could take up to two years before producers, rig operators, and service firms in the deepwater Gulf can resume activity to pre-spill levels," said Steven Wood, a managing director at Moody's.
U.S. President Barack Obama and top BP executives are set for a showdown over the Gulf of Mexico oil spill this week, as the likely damages bill piles more pressure on the oil giant's shares. For details click .
The U.S. has imposed a six-month moratorium on deepwater drilling in the Gulf of Mexico that is set to last through November, "posing uncertainties that could last well beyond this date for producers, drillers and service companies operating in the region," Wood said.
Congress is considering a measure that would lift or remove liability caps for deepwater producers, which could lead some companies in the Gulf to reevaluate whether to continue operating there, Moody's said.
New rules also could make it too expensive for small producers to do business, Moody's said.
The rating company said major offshore drillers are likely to have a "more muted credit-rating effect" due to their ability to do business in different regions.
BP shares extended losses after the U.S. market opened on Monday, falling 8 percent.
"In the short term, the blowout has reduced asset valuations in the Gulf and hit company valuations," Moody's said. "Although these valuations are expected to rebound eventually, it is difficult to tell when the market will regain its appetite for the risk involved in deepwater production."
[Source: Reuters, NY, 14Jun10]
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