Moody's rates Chaparral Energy notes B3

Moody's Investors Service said it assigned first-time ratings to Chaparral Energy Inc., including a B2 corporate family rating, a B3 rating to its proposed $325 million senior unsecured notes due 2015 and a SGL-3 speculative grade liquidity rating.

The outlook is stable.

Proceeds from the offering will be used to repay borrowings under the company's senior secured credit facility and a $132 million bridge loan due to GE, which was recently entered into in connection with the company's acquisition of GE's limited partner interest in CEI Bristol-Acquisition LP.

The ratings are restrained by Chaparral's small size, high leverage, high full-cycle costs, low leveraged full-cycle ratio, concerns about the reliability of its long-lived reserves and the company's plans for rapid growth and spending on riskier and more costly projects such as carbon dioxide (CO2) tertiary recovery, the agency said.

Moody's also said the ratings are supported by the durable nature of the Chaparral's production profile which is characterized by low decline rates and its relatively low all-sources finding and development costs, which is largely a function of the mature, long-lived nature of the company's reserves.

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