DBRS Downgrades Rating of BP to AA (low), Maintains at Under Review - Negative

DBRS has today downgraded the Issuer Rating of BP p.l.c. (BP or the Company) to AA (low) from AA (high). The rating remains Under Review with Negative Implications, where it was placed on June 2, 2010 (see separate press release). The rating action reflects the negative considerations and considerable uncertainties outlined below associated with the protracted oil spill in the Gulf of Mexico, while cognizant of BP’s financial and operational strength as well as its global reach.

The rating action reflects the following considerations:

1. Potentially significant liabilities, litigation exposure and clean-up costs associated with the oil spill on BP’s operated Macondo well in the Gulf of Mexico could weigh heavily on the Company’s financial and business profiles, apart from potential criminal or civil penalties, and possible U.S. legislative changes. How the Company funds these expenses over time (including using internal cash flow, incremental debt, asset sales proceeds or dividend reduction) will also determine the extent of the ultimate impact on the Company’s creditworthiness.

2. Considerable uncertainties remain regarding the success and timing of the Company’s effort to completely stop the oil flow, until a relief well is complete and successful, expected in early August, noting the potential impact of weather-related disruptions. After a series of unsuccessful mitigating actions of BP together with the U.S. authorities and industry experts, the current cap containment operation has only partially capped the leaking well.

DBRS will continue to monitor the Company’s situation. DBRS also expects that when a complete stoppage of the oil spill is achieved and more reliable estimates of the extent of the clean-up costs and potential liabilities associated with the spill are available, more clarity will be reached as to the long-term impact on the Company’s credit and operational profiles. Until such occurs, the rating is expected to remain Under Review with Negative Implications, reflecting the high uncertainties that remain. The United States accounted for more than 25% of the Company’s production and reserves and an estimated higher contribution to earnings and cash flow in 2009.

Note:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Oil & Gas Companies, which can be found on the DBRS website under Methodologies.

This is a Corporate rating.