easy · Corporate Credit Analysis

What does this imply for its credit rating compared to a 'Fourth Quartile' producer?

1. Ratings are identical since all commodity producers remain pure price-takers in the market.
2. It is likely to have a higher rating because it can generate positive cash even in price troughs.
3. It is inherently more speculative-grade because its earnings are entirely tied to commodity prices.
4. It is likely to have a lower rating because such low production costs usually imply under-investment in assets.

Sign up free to see the explanation and track your rank →