Moody’s assigns B2 to Ultra Resources

Moody’s Investors Service said it assigned ratings to Ultra Resources, Inc., including a B2 corporate family rating, a B2-PD probability of default rating and a B2 rating to its senior secured first-lien revolving credit facility. These are new ratings for Ultra, following its emergence from bankruptcy.

“Ultra benefits from having no debt after emerging from bankruptcy and could generate meaningful positive free cash flow as it pursues a consolidation strategy,” said James Wilkins, a Moody’s vice president and senior analyst. “However, the company could be challenged to restart drilling operations and maintain flat or growing production volumes if natural gas prices do not improve materially.”

The credit facility is rated B2, the same level as the B2 CFR, and reflects the senior secured nature of revolver borrowings, lack of other debt in the liability structure and the small number of lease obligations and trade payables, the agency said.

The outlook is stable. The outlook reflects the expectation Ultra will weather potential volatility in natural gas commodity prices and generate positive free cash flow while not conducting drilling operations, Moody’s said.

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