S&P Global Ratings on Feb. 26 revised Woodside Petroleum Ltd.’s outlook to “negative” from “credit watch negative,” citing the Australian oil and gas explorer’s limited financial capability in the face of uncertainty in the sector.

The agency also shifted its industry risk assessment on the oil and gas sector to “moderately high” from “intermediate” as a global shift to renewables threatens to hit the profitability of fossil fuel producers, S&P said in a statement.

However, it reaffirmed Woodside’s long-term issuer credit rating of “BBB+” on hopes that the company’s high exposure to LNG and low-cost assets could somewhat counter the risk, as Asia is expected to reduce its thermal coal dependence in its first step towards energy transition.

“We expect the capital expenditure reduction from Sangomar and Pluto Train 2, combined with sales proceeds, will support an improvement in key credit measures,” S&P said, adding that it expected Woodside to stay financially “conservative” through the growth phase.

“The rating recognizes the liquidity and balance sheet strength which positions Woodside well to take a targeted final investment decision on our value-accretive Scarborough gas development in the second half of 2021,” the Perth-based company’s CEO, Peter Coleman, said.

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In a separate statement, S&P affirmed rival Santos Ltd.’s “stable” outlook on the gas producer’s capacity to fund its upcoming Barossa project.