S&P gives Kinetik, notes BB+

S&P said it gave BB+ ratings to Kinetik Holdings LP, formerly known as Altus Midstream Co., and its senior unsecured notes. The recovery rating on the notes is 3, indicating meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

Kinetik closed its merger with BCP Raptor Holdco LP, the parent company of EagleClaw Midstream Ventures LLC and BCP Raptor II LLC on Feb. 22.

The agency also raised the issuer credit rating and issue-level ratings on EagleClaw to BB+ from B and the issuer credit rating and issue-level ratings on Raptor II to BB+ from B-. It also removed the ratings from CreditWatch, where S&P placed them with positive implications on Oct. 22.

“We expect Kinetik to successfully integrate the operations of the acquired entities. Kinetik's assets have been easily integrated with minimal spending (less than $30 million). The excess capacity across the pro forma system reduces the need for large capital expenditures over our forecast period. The merger eliminates the need for large spending on new cryogenic facilities in the near-term. The reduced capital spending will accelerate the company's free cash flow generation over the immediate term. We believe the company can benefit from over $50 million of annual EBITDA synergies from a combination of system integration and cost savings,” S&P said in a press release.

The outlook is stable.

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