The downgrading was called "premature" by Marvin Hambrick, executive vice president of Kerr-McGee.
"We do not believe the downgrading was warranted by the decline to date," Hambrick said. "Moody's was premature in assuming prices will continue to decline and to adversely affect Kerr McGee's financial condition."
Moody's made the following changes in the company's rating:
- Lowered ratings of Oklahoma City-based Kerr-McGee's senior debentures to single-a3 from single-a2.
- Downgraded commercial paper of Kerr-McGee Credit Corp., a fianance subsidiary, from prime-1 to prime-2.
"Kerr-McGee operations in oil and gas explorations, production, refining, marketing and contract drilling will be adversely affected by sharply lower oil prices, resulting in lower cash flows, earnings and fixed-charge protection," Moody's said.
The ratings service saw additional pressures on both Kerr-McGee's upstream and downstream operations including its contract drilling segment, said Tom Coleman, analyst for Kerr-McGee and Phillips Petroleum Co. of Bartlesville. Debt ratings for Phillips were lowered last week.
"We feel its a necessary adjustment to reflect additional risk," he said. "We see possible asset write-downs in some segments. …