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By Bloomberg

The U.S. shale-oil industry made another enemy today: Europe’s largest crude explorers.

Standard & Poor’s Ratings Services revised its outlook to negative for Royal Dutch Shell Plc, Total SA and BP Plc as the oil-market rout driven by weakening demand and a flood of supply from American shale fields threatens cash flow into 2016.

The credit-grading company also cast a dim eye on Houston- based ConocoPhillips, saying it’s facing similar cash flow pressure, and said it may cut the ratings on Eni SpA and BG Group Plc’s BG Energy Holdings. S&P cited “the dramatic deterioration in the oil price outlook” and the 50 percent increase in debt loads and dividend commitments for the biggest European oil producers since the end of 2008.

The reassessment of the European drillers stemmed from the “precipitous decline” in crude prices triggered by stalling demand growth and “unconstrained supply -- notably on the back of sustained shale oil production growth in North America,” S&P said in a statement today.

Oil has slumped about 21 percent since OPEC decided against cutting its production target last month, prompting a plunge in the value of currencies from the Russian ruble to the Norwegian krone. Prices of Brent, the European benchmark crude, have fallen about 45 percent this year, setting the stage for the largest annual drop since 2008.

The major European oil explorers are hamstrung by heftier investor payouts than their U.S. rivals that leave them less room to maneuver during cash crunches.

Dividend Payouts

BP has an indicated dividend yield of 6.85 percent, followed by 5.7 percent for Total and 5.25 percent for Shell. By comparison, Exxon Mobil Corp. and Chevron Corp.’s dividend yields are 2.95 percent and 3.83 percent, respectively.

The European companies also are burdened with relatively inflexible capital spending budgets because most contracts require cash infusions into oil and gas projects, S&P said.

ConocoPhillips was among the first oil producers to slash its 2015 spending plan two weeks ago when it announced a 20 percent budget cut and plans to defer some projects. Even with those cuts, ConocoPhillips’s net debt may balloon during the next two years as it funnels some cash into “its sizable common dividend,” S&P said in a separate note to clients today.

ConocoPhillips’s indicated dividend yield is 4.2 percent, higher than its biggest U.S. competitors but below that of the three European major producers also reassessed by S&P today.