S&P downgrades Denbury Resources

S&P said it lowered the issuer credit rating on Denbury Resources Inc. to CCC+ from B-.

The outlook is negative.

The agency also said it lowered the rating on the company's senior secured notes to B from B+ with a 1 recovery rating, reflecting 90% to 100% expected default recovery.

S&P also said it lowered the rating on the company's subordinated notes to CCC from CCC+ with a 5 recovery rating, indicating 10% to 30% expected default recovery.

Denbury Resources announced the mutual termination of its merger agreement with Penn Virginia, S&P explained.

Denbury's leverage is now expected to exceed prior estimates under the $50 WTI oil commodity price assumptions without the benefit of the merger, the agency said.

S&P said it believes Denbury is dependent on favorable market conditions to meet its financial commitments over the long term, although it is not facing a credit trigger within the next 12 months.

The negative outlook reflects a forecast that debt-to-EBITDA will remain elevated and tight covenants may limit access the company's credit facility, although it is currently undrawn.

The market conditions also may make refinancing its 2021 maturities challenging, the agency added.

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