Fitch gives Resolute notes B+/RR2

Fitch Ratings said it assigned a B+/RR2 rating to Resolute Energy Corp.’s issuance of $550 million unsecured notes due 2025.

Proceeds will be used to refinance Resolute Energy’s existing 8˝% unsecured notes due 2020 and to pay transaction fees, expenses and associated call premium.

The transaction will extend the company’s maturity profile by five years. The notes will be unsecured obligations of Resolute Energy and will rank junior to the revolving credit facility, which has a Feb. 17, 2021 maturity date.

Fitch said the ratings are based on Resolute Energy’s small but evolving asset base, additional liquidity provided by divestment of Aneth Field, and an improving operating cost structure.

The agency estimates cash costs will decline by 29% to $12.9/boe in 2018 from $18.24/boe in 2017 and approach the cost profile of Permian based E&P operators to reflect Resolute Energy’s new company profile as a pure pay Permian producer.

Fitch said its forecast incorporates 2017 production volumes of 23.8 mboe/day, at the low end of management guidance of 24 to 25.5 mboe/day.

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