S&P upgrades Extraction Oil

S&P said it raised the corporate credit rating on Extraction Oil & Gas Holdings LLC to B and assigned a B corporate credit rating to Extraction Oil & Gas Inc.

The agency also said it raised the ratings on the company's $550 million senior unsecured notes to B based on a 4 recovery rating, which indicates 30% to 50% expected default recovery.

The outlook is stable.

The upgrade follows the company’s Bayswater acquisition, which increased its production and reserves, S&P said.

The upgrade also considers Extraction's successful initial public offering, which strengthens the balance sheet and positions the company to expand production and reserves further in 2017 and beyond, the agency explained.

The ratings also reflect the company's vulnerable business risk profile as a relatively small and narrowly focused company with a limited track record and a high proportion of proved undeveloped reserves, S&P said, as well as its aggressive financial risk profile.

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