S&P rates Alta Mesa notes B

Standard & Poor's said it assigned a B corporate credit rating to Alta Mesa Holdings LP, along with a B rating and 4 recovery rating to its planned $300 million senior unsecured note offering due 2018. The 4 recovery rating indicates an expectation of 30% to 50% recovery in a default.

Alta Mesa Finance Services Corp., a subsidiary, will be a co-issuer of the notes.

The proceeds will be used from the offering to repay existing debt and fund a $50 million payment to shareholders.

The outlook is stable.

The ratings reflect the company's relatively small asset base and production levels, significant exposure to natural gas and the company's aggressive growth strategy, S&P said.

These risks are mitigated somewhat by the company's favorable cost structure, modest geographic diversity and enhanced liquidity as a result of the note offering, the agency said.

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