S&P cuts Nostrum Oil & Gas

S&P said it downgraded to CCC from CCC+ its long-term issuer credit and issue ratings on Nostrum Oil & Gas and the senior unsecured notes, issued by Nostrum Oil & Gas Finance BV, and guaranteed by all the group's entities.

Nostrum will post very weak credit metrics in 2020-2021. On Jan. 28, Nostrum announced in its 2020 guidance it will stop drilling until it can find a technical solution to resolve geological issues, and that it will likely produce only 20,000 boepd this year. “This is a significant drop from last year's already-low 26,700 boepd,” said S&P in a press release.

S&P said it doesn’t see Nostrum being able to materially restore its production levels and cash flow generation in the next two years, making the refinancing of its $725 million bond due July 2022 very unlikely. “These circumstances lead us to believe there is a very high likelihood of a distressed exchange in the next 12 months,” the agency said.

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