Moody’s cuts Great Western Petroleum

Moody’s Investors Service said it downgraded Great Western Petroleum, LLC’s corporate family rating to Caa3 from Caa1 and probability of default rating to Caa3-PD from Caa1-PD. Moody’s lowered the unsecured notes to Ca from Caa3.

“The rating action reflects Great Western’s high refinancing risk associated with its 2021 notes maturity at a time when the exploration and production sector is deeply out of favor with capital markets. Compounding the maturity pressure is the springing expiration on the company’s revolving credit facility, which will move to March 30, 2021, if the 2021 notes haven’t been repaid or refinanced in full,” Moody’s said in a press release.

Also, Colorado’s regulatory uncertainty is a social risk, which further complicates Great Western’s ability to refinance its notes, the agency said.

Great Western’s notes trade at distressed levels, which, when coupled with its limited ability to generate meaningful free cash flow in periods of typical spending, point to the possibility of restructuring and its potential to be done on distressed terms, Moody’s said.

The outlook remains negative.

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