S&P pumps up Permian Resources

S&P said it raised Permian Resources Corp.’s issuer rating to BB- from B+ and removed it from CreditWatch where it was placed with positive implications on Aug. 22. The outlook is now positive.

The agency also affirmed its BB- issue-level rating on Permian's unsecured debt. The recovery rating is 3, indicating meaningful (capped at 50%-70%; rounded estimate: 65%) recovery in default.

The rating actions follow Permian closing its acquisition of Earthstone Energy Inc., S&P said.

“The upgrade reflects the company's strong expected credit metrics following the close of the acquisition. In our view, Permian financed the acquisition of Earthstone in a credit-friendly manner by using its stock and assuming the company's debt in a transaction that valued it at approximately $4.5 billion,” the agency said in a statement.

The positive outlook reflects the view that Permian will raise its production and proved reserves over the next 12-18 months, in line with its higher-rated peers, while delivering considerable positive free operating cash flow and maintaining modest credit metrics, S&P said.

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