S&P rates Trident notes B

Standard & Poor's said it assigned a B- long-term corporate credit rating to Trident Resources Corp. and a B senior debt rating with a 2 recovery rating to Trident's proposed C$175 million senior debt issue. The 2 recovery rating reflects the expectation of substantial (70%-90%) recovery in a default scenario.

The outlook is stable.

Although the prevailing weakness in North American natural gas prices somewhat weakens Trident's natural gas-focused business profile, the company's competitive full-cycle cost profile should ensure positive operating cash flow generation, the agency said.

The ratings on Trident reflect the company's anticipated negative free cash flow generation in the next two years, little likelihood of debt reduction and limited financial flexibility regarding expected covenant levels, the agency added.

These weaknesses are somewhat offset by Trident's competitive levered full-cycle costs, the relatively low geological risks associated with its coal bed methane resources and the very long reserve life index associated with the company's coal bed methane reserves, S&P said.

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