Moody’s drops Fieldwood CFR to B2, loan to B3

Moody's Investors Service said it downgraded Fieldwood Energy LLC's corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and second-lien senior secured term loan rating to B3 from B2.

The Ba2 rating on Fieldwood's first-lien senior secured term loan was affirmed, and the outlook was changed to negative from stable.

The agency also changed Fieldwood's speculative grade liquidity rating to SGL-3 from SGL-2, reflecting adequate liquidity.

"The downgrades reflect our view that Fieldwood will have significantly weaker margins and cash flows and higher leverage through 2016," Moody's analyst Sajjad Alam said in a news release.

"While the company has significantly reduced capital expenditures to cope with current low oil prices, we believe underinvestment over an extended period could lead to a meaningful decline in Fieldwood's production and reserves in future years. The company will also face elevated refinancing risk in a sustained low commodity price environment."

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