S&P rates Delta Petroleum notes B-

Standard & Poor's said it assigned its B- corporate credit rating to Delta Petroleum Corp. At the same time, S&P assigned its B- senior unsecured debt rating to Delta's proposed $150 million senior unsecured notes due 2015. The outlook is positive.

S&P said the ratings on Delta reflect its very aggressive growth strategy, high debt leverage, elevated cost structure and limited reserve base.

Ratings incorporate Delta's solid reserve life, high operatorship of its properties and potential for improved costs and reserves if planned development goals are met, according to S&P.

Although near-term EBITDA plus expenses (EBITDAX) interest coverage is expected to exceed 5x, this would drop below 3x if prices return to midcycle levels and future development goals are not met, S&P said.

Likewise, although near-term debt coverage of EBITDAX is expected to be near 2x, this could rise to about 4x if commodity prices fall and future production goals are not achieved.

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