Fitch downgrades Ultra Petroleum

Fitch Ratings said it downgraded Ultra Petroleum Corp.'s and Ultra Resources, Inc.'s long-term issuer default ratings to CCC+ from B-.

Fitch also said it downgraded Ultra's secured revolver and term loan to B+ with recovery rating of RR1 from BB- with recovery rating of RR1, senior secured second-lien notes to B with recovery rating of RR2 from B+ with recovery rating of RR2 and senior unsecured notes to CCC- with recovery rating of RR6 from CCC with recovery rating of RR6.

The ratings also were placed on Ratings Watch negative.

The downgrades are due to a reduction to 2019 production estimates, the agency said.

Although the debt exchanges are favorable in reducing overall debt, Fitch said it noted that the use of second- and third-lien exchanges reflects the company's reduced financial flexibility.

Production is expected to decline over the next three years, which will make it challenging for Ultra to generate material free cash flow to help further reduce debt absent higher prices, the agency said.

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