Moody’s rates Ascent Resources B2, notes B3

Moody's Investors Service said it assigned Ascent Resources Utica Holdings, LLC a B2 corporate family rating and a B3 rating to its proposed $1.5 billion senior unsecured notes.

The outlook is stable.

Net proceeds will be used to repay Ascent Resources – Utica, LLC's (ARU) second-lien term loan.

Moody’s said the B2 corporate family rating reflects Ascent Resources’ natural gas-weighted production profile, which yields lower cash margins than an oil-weighted production base on an equivalent unit of production, leveraged capital structure, weak asset coverage and Moody's expectation that the company will maintain a large drilling budget with aggressive growth targets through 2018.

“The rating also reflects ARU's large firm transportation over-commitment in 2018, which could require additional liquidity in a sustained low-natural gas price environment, although the company has historically managed this exposure well through use of asset management agreements with third-party marketing companies,” the agency said in a news release.

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