S&P trims Ultra Petroleum

S&P said it lowered the issuer credit rating on Ultra Petroleum Corp. to CCC- from CCC+.

The agency downgraded the issue-level rating on the company’s senior secured term loan to CCC+ from B, with a 1 recovery rating, indicating an expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a payment default.

S&P cut the issue-level rating on the second-lien notes to CCC from B, and revised the recovery rating to 2, indicating an expectation for substantial (70%-90%; rounded estimate: 85%) recovery.

The issue-level rating on the unsecured notes remains D, but S&P revised the recovery rating to 6 indicating an expectation of negligible (0%-10%; rounded estimate: 0%) recovery.

“The downgrade follows Ultra’s recent announcement that it is suspending drilling in the Pinedale by the end of September in response to unfavorable natural gas pricing. Additionally, the company amended its credit facility again, which reduced revolver commitments to $200 million (from $325 million) with a step-down to $120 million by February 2020,” said the agency in a press release.

The outlook is negative.

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