S&P downgrades WPX Energy

Standard & Poor’s said it lowered the corporate credit rating on WPX Energy Inc. to B+ from BB-.

The outlook is negative.

The agency also said it lowered the senior unsecured ratings to B from BB- and revised recovery to 5, indicating 10% to 30% expected default recovery, from 3.

The company converted its credit facility to a secured facility and S&P said it raised the rating on this facility to BB from BB- with a recovery rating of 1, indicating 90% to 100% expected default recovery, from 3.

S&P said it also is withdrawing the rating on the credit facility at the issuer’s request.

The downgrades reflect an expectation that WPX’s financial measures will significantly weaken in 2017 as production falls due to the asset sale and its above–market hedges roll off, the agency said.

The negative outlook reflects an expectation that core ratios will significantly weaken in 2017 as this year’s favorable hedges roll-off and WPX’s cash flows are more exposed to market prices, S&P said.

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