S&P lowers Dune outlook to negative

Standard & Poor's said it revised its outlook on Dune Energy Inc. to negative from stable and affirmed the ratings, including the B- corporate credit rating, on the company.

The agency said that the outlook revision reflects Dune's deteriorating liquidity position, which could become precarious in the second half of this year, as well as the company's burdensome cash operating costs and interest expense.

According to the agency, Dune's aggressive $121 million capital budget for 2008 will outstrip internally generated cash flows.

S&P said that the ratings on Dune reflect its small size, short operating history, uncompetitive cost structure and highly leveraged financial profile.

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