S&P lowers Resolute Energy view to negative

Standard & Poor’s said it revised the outlook on Resolute Energy Corp. to negative from stable and affirmed its B- corporate credit rating.

The agency also said it affirmed the B- rating with 3 recovery rating on the company’s second-lien debt and the CCC rating with 6 recovery rating on its unsecured notes.

Resolute Energy’s leverage will continue to deteriorate over the next two years, approaching levels viewed as unsustainable if the company is unable to raise significant external capital via asset sales or an equity transaction, S&P said.

The company’s funds from operations-to-debt is expected to fall to less than 10% in 2015 and deteriorate further in 2016, the agency added.

In order to preserve liquidity, the company is spending close to maintenance levels, which should keep production essentially flat this year with a decline in 2016, S&P said.

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