S&P rates California Resources B

S&P said it rated California Resources Corp. B and its planned $600 million of senior unsecured notes due 2026 B+ with a 2 recovery rating. The 2 rating indicates an expectation for substantial recovery in default.

“Our view on CRC's business risk profile primarily reflects its high-cost structure, our expectation of a modest decline in production and reserves given our commodity price outlook, and lack of diversification outside of California,” S&P said in a press release.

Proceeds will be used to repay debt.

The outlook is stable. The outlook mirrors the expectation CRC’s production and reserves will modestly decline under current price assumptions, but it will continue to maintain FFO to debt above 30% on a sustained basis, the agency said.

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