Moody's lowers Tapstone Energy

Moody's Investors Service said it downgraded Tapstone Energy, LLC's corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD.

Moody's also said it affirmed the rating on Tapstone's senior unsecured notes at Caa2.

The outlook was changed to negative from stable.

The downgrades reflect weak liquidity and reduced financial flexibility, which could constrain the pace of development, limiting production growth, Moody's said.

Tapstone's high cost of debt and bonds meaningfully below par constrain the company's ability to refinance, which raises risk of a distressed-debt exchange that could lead to principal losses for bondholders and be deemed a default by Moody's, the agency explained.

The negative outlook reflects heightened risk of further erosion of liquidity and execution risks to growth as the company repositions its asset base, Moody's said.

The ratings reflect the small scale, basin concentration, constraints on financial flexibility and refinancing risks, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.