Moody's rates Encore's senior notes B2

Moody's Investors Service said it assigned a B2 rating to Encore Acquisition's $150 million of 12-year senior subordinated notes and affirmed its existing Ba3 corporate family rating and B2 senior subordinated note ratings.

The outlook remains positive.

The ratings are supported by Encore's steady sequential quarter production gains to date and acceptable, although currently elevated, leverage on proved developed reserves relative to Encore's rising scale and diversification. The ratings also consider favorable production response to date from Encore's high pressure air injection projects, a very supportive expected price environment and expected supportive cash flow coverage of vital sustaining capital spending and a durable 12-year PD reserve life, Moody's said.

Moody's said the ratings are restrained by Encore's still modest scale, penchant for fully debt-funded acquisitions and expected active acquisition program. Ratings also are constrained by heavy capital spending, rising operating costs and partly due to the higher costs of the company's increasingly important high pressure air injection assisted production from its core Cedar Creek Anticline properties.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.