Fitch ups Diamondback Energy, rates notes BBB

Fitch Ratings said it upgraded Diamondback Energy, Inc.’s ratings, including its long-term issuer default rating to BBB from BBB-, and upgraded the IDRs of Diamondback O&G LLC and Energen to BBB from BBB-.

“The upgrade reflects management’s recently announced capital allocation program for 2020 and beyond, which prioritizes positive FCF generation and measured production growth, and the achievement of realized size and scale with forecasted production trending towards 300 mboepd. The company’s 2020 guidance targets 10%-15% oil growth with a $45/bbl oil price-linked capital program leading to Fitch’s base case positive FCF of around $510 million and standalone leverage of approximately 1.5x,” Fitch said in a press release.

Fitch also assigned BBB ratings to Diamondback Energy’s senior unsecured notes due 2024, 2026 and 2029. Diamondback O&G LLC’s revolver was moved to unsecured from secured and upgraded to BBB from BBB-.

The notes are part of a proposed refinancing. Proceeds will be used to repay Diamondback’s $1.25 billion senior unsecured notes due 2024 and revolver borrowings.

“Fitch believes the transaction is credit supportive, adding increased financial flexibility through an improved maturity profile and revolver availability,” the agency said.

The outlook is stable.

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