Shares in Santos fell 9% after Standard & Poor’s downgraded the credit rating of the oil and gas producer.
Energy stocks are already under pressure with oil prices falling to their lowest level in five years.
The credit rating agency lowered the long-term corporate credit rating and the issue credit rating on Santos’ senior notes to BBB from BBB+.
Standard & Poor’s says the outlook is negative, reflecting the risk of a prolonged period of weak oil prices.
“The severe decline in oil prices and large committed capital expenditure for the completion of its Gladstone Liquefied Natural Gas (GLNG) project would weaken Santos’ credit metrics to levels below our expectation for the BBB+ rating,” says Standard & Poor’s.
The rating action reflects the pressure on Santos earnings and cash flows from the rapid fall in oil prices.