S&P gives B to Extraction Oil notes

S&P said it affirmed Extraction Oil & Gas Inc.’s B corporate credit rating and assigned its B issue-level rating and 3 recovery rating to the company's proposed $350 million senior unsecured notes. The rating indicates an expectation for meaningful (50% to 70%; rounded estimate: 60%) recovery in the event of a payment default.

At the same time, the agency affirmed the B issue-level rating on the existing $550 million senior unsecured notes and revised the recovery rating to 3. The rating outlook is stable.

"We raised the recovery ratings on the unsecured debt by one notch due to improved recovery prospects resulting from an increase in proved reserves value from recent development activities," S&P credit analyst Michael McConnell said in a news release.

"We affirmed the B corporate credit rating because we believe credit measures remain appropriate for the current rating. We expect the company to use proceeds of the unsecured notes for general corporate purposes and to provide flexibility to execute on its strategy for increased capital spending in the DJ Basin."

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