Moody's: Encore outlook to negative

Moody's Investors Service said it changed Encore Acquisition Corp.'s outlook to negative from developing.

Moody's said it affirmed the Ba3 corporate family rating and probability of default rating, and the B1, LGD5 (79% changed from 81%) ratings on the company's senior subordinated notes.

"Encore has high leverage for its Ba3 rating, and the negative outlook reflects the risks that the company will not sustain its planned debt reduction in 2009," commented Pete Speer, Moody's vice president.

"The $190 million of proceeds from the recent hedge monetization provides a substantial down payment on debt reduction, but that leaves Encore with only a small amount of hedged oil production for the remainder of the year."

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