Moody's may downgrade Cnooc

Moody's Investors Service said it changed the status of its review of the Baa2 issuer rating of Unocal Corp. and the Baa2 guaranteed long-term debt and prime-2 commercial paper ratings of Union Oil Co. of California to direction uncertain from review for upgrade.

This follows the announcement that Cnooc Ltd. is making a competing higher offer for Unocal valued at $19.6 billion, the agency said.

Moody's said it placed Unocal's ratings under review for upgrade April 4, when Chevron Corp. announced a plan to acquire Unocal in a combined equity and cash transaction valued at $18.4 billion, including debt assumption.

The review of Unocal's ratings is continuing with direction uncertain pending resolution of who will own Unocal and, in the event Cnooc Ltd. prevails in its bid, the magnitude of any downgrade of its credit rating as well as the level of support it provides for Unocal's existing debt securities, Moody's added.

Cnooc's A2 long-term issuer rating and the A2 debt ratings of its guaranteed subsidiaries are under review for possible downgrade, reflecting the leverage implications of its all-cash offer and the integration and operating challenges it faces in this large transaction, the agency said.

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