S&P puts Ithaca Energy on watch

S&P said it placed its rating on Ithaca Energy Ltd. on CreditWatch negative as this rating is currently capped by the assessment of the company’s parent the Delek Group's creditworthiness.

“The recent drop in oil prices may have a material impact on Delek Group's liquidity position, and consequently on its creditworthiness. After oil prices fell to around $35 per barrel (/bbl), we revised our working assumption for crude oil to $40/bbl for the rest of 2020 (from a previous assumption of $60/bbl) and $50/bbl in 2021 (from $55/bbl),” said S&P in a press release.

Ithaca will likely distribute dividends to Delek in 2020, and S&P doesn’t expect this to weigh on its credit metrics. “We previously assumed that Ithaca would balance capital allocation between growth and returns to shareholders, an assumption that will be tested now that Delek Group is looking for additional sources to cover its liquidity shortfall,” the agency said.

S&P sees resolving the CreditWatch placement over the coming weeks.

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