Fitch cuts Encino Acquisition

Fitch Ratings said it downgraded the long-term issuer default ratings for Encino Acquisition Partners Holdings, LLC and Encino Acquisition Partners, LLC, together, Encino, to B from B+. Also, Fitch downgraded the senior secured second-lien term loan to B/RR4 from BB-/RR3.

“Fitch expects production to be slightly lower than planned due to reduced drilling as a result of low natural gas and NGL prices earlier in the year. Like other natural gas peers, Encino generated a negative unhedged netback in the second quarter of 2020 due to lower commodity prices. Fitch expects EBITDA and FCF will fall below previous expectations for 2020 and 2021. As a result, leverage ratios are expected to exceed previous negative sensitivities over the next two years,” Fitch said in a press release.

The outlook remains negative.

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