S&P lowers Western Midstream

S&P downgraded Western Midstream Operating, LP's issuer credit rating to BB+ and its issue ratings on Western’s senior secured debt also to BB+ with a recovery rating of 3.

The outlook is negative.

Simultaneously, parent Occidental Petroleum Corp. has been downgraded to BB+, capping the rating for the subsidiary.

S&P no longer thinks that Western will be able to deleverage as planned over the next few years, due to an expected decline in the company’s gathering and processing systems because of the material decline in commodity prices, resulting in lower cash flows than previously expected.

“We are now expecting EBITDA to decline year over year in 2020 and 2021, while leverage will remain in the 4.75x – 5x range over the next few years.

“Prior to the updated volume decline, we were expecting Western to grow its EBITDA and deleverage gradually, but we no longer think that's likely given the market stress,” S&P said.

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