S&P lifts RSP Permian unsecured debt

Standard & Poor’s said it raised the issue-level rating on RSP Permian Inc.’s senior unsecured debt to B from B- and revised the recovery rating to 5 from 6.

The 5 recovery rating indicates 10% to 30% expected default recovery.

The corporate credit rating remains at B+.

The outlook is stable.

The upgrades reflect an updated mid-year reserve value for RSP Permian, S&P said, based on a company-provided PV10 report using recovery price-deck assumptions of $50 per barrel for West Texas Intermediate crude oil and $3.50 per million British thermal units for Henry Hub natural gas.

The company’s B+ corporate credit rating reflects the company’s weak business risk and aggressive financial risk, S&P said.

The ratings consider the company’s small proved reserve base, geographic concentration in a single basin, sizable portion of undeveloped reserves and limited management track record, the agency said.

These risks are somewhat offset by the low finding and development risk for reserves in the Permian Basin, S&P said.

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