Moody's ups Cimarex notes

Moody's Investors Service said it upgraded Cimarex Energy Co.'s notes rating to Ba2 from Ba3 and affirmed Cimarex's Ba2 corporate family rating. Moody's changed the outlook to positive from stable and assigned an SGL-1 speculative-grade liquidity rating.

The positive rating outlook reflects Cimarex's continuing successful track record in growing production and reserves at competitive costs, while maintaining highly conservative financial policies, the agency said. While Cimarex faces heavy capital spending needs, the company's low financial leverage profile and disciplined drilling strategy should enable sound credit metrics over the near-term.

The company's ratings remain restrained by moderate size and limited basin diversification compared to higher rated peers, still somewhat early stage in the field delineation and development of its Woodford-Cana and Permian shale plays, expected rising oilfield service costs and secularly weak natural gas prices, the agency said.

Cimarex's SGL-1 rating reflects a very good expected liquidity profile through 2012, the agency added.

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