Moody's rates Gastar notes Caa2

Moody's Investors Service said it assigned ratings to Gastar Exploration USA, Inc., including a Caa1 corporate family rating and a Caa2 rating to the proposed offering of $200 million of senior secured notes due 2018.

Moody's also assigned a SGL-3 speculative grade liquidity rating.

The outlook is positive.

The proceeds from the proposed notes offering will be used to repay a portion of borrowings under Gastar's senior secured revolving credit facility, fund its acquisition of certain Mid-Continent assets and pay related fees and expenses.

"Gastar's rating is constrained by its relatively small size and asset concentration in the Marcellus, as well as by execution risk related to its development and JV plans in Oklahoma's Hunton Limestone formation, and relatively high leverage," Moody's vice president Saulat Sultan said in a news release. "However growing liquids exposure, success in using JV structures to its advantage, and a meaningful inventory of drilling opportunities are credit positive factors."

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