Standard and Poor’s cut ExxonMobil’s rating on Tuesday in response to low oil prices and high dividend payments.

The rating agency lowered Exxon’s corporate credit and long-term debt ratings to AA+ from AAA.

S&P also removed the ratings from CreditWatch where they had been placed with negative implications on February 2.

The company’s short-term corporate credit remains A-1+ with a stable outlook.

S&P said low commodity prices, high reinvestment requirements and large dividend payments prompted the ratings cut.

“The company’s debt level has more than doubled in recent years, reflecting high capital spending on major  projects in a high commodity price environment and dividends and share  repurchases that substantially exceeded internally generated cash flow,” S&P said.

The company is expected to benefit from sharply reduced capital spending and near-term production gains as major projects come online.

ExxonMobil cut its 2016 capital spend by 25 percent from year ago levels in February after managing to beat analysts expectations despite its 2015 earnings falling to $16.2 billion from $32.5 billion the previous year.

Earlier this month, Exxon began production at the Julia field in the Gulf of Mexico ahead of schedule and under budget.

Just three days later, the company also began production at the Point Thomson project in Alaska’s North Slope.

However, despite efficiency gains and lower service costs, Chevron will most likely have to boost spending to maintain production and replace reserves, the ratings agency said.

“As a result, we expect leverage to remain weaker than levels  consistent with a ‘AAA’ rating, and we believe that lowering ratings to ‘AA+’  is appropriate,” S&P said.

The ratings agency added that it expects Exxon to return cash to shareholders rather than building its cash level or cutting debt, a move that it expected to limit improvement in the agency’s projected credit measures when commodity prices improve.

“The company’s very long history of making large  investments and acquisitions in a fiscally prudent manner is a positive rating  factor for its credit quality,” S&P said.


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