Moody's upgrades Permian Resources

Moody's Investors Service said it upgraded Permian Resources Operating, LLC's corporate family rating to Ba3 from B1, probability of default rating to Ba3-PD from B1-PD, and backed senior unsecured notes to B1 from B2, and maintained the positive outlook following the closing of Permian Resources' merger with Earthstone Energy Holdings, LLC. Permian Resources' speculative grade liquidity rating is maintained at SGL-1.

At the same time, the agency raised the backed senior unsecured notes of Earthstone to B1 from B3 and withdrew all the other ratings of Earthstone, including Earthstone's B1 corporate family rating, B1-PD probability of default rating and SGL-2 speculative grade liquidity rating kept the positive outlook as Permian Resources is the surviving entity of the merger.

"The upgrade to Ba3 CFR with a positive outlook reflects Permian Resources' significantly increased scale in the Permian basin and the expectation of improved credit metrics following the closing of the all-stock merger with Earthstone," said Thomas Le Guay, a Moody's vice president, in a press release.

"The company will need to prove its ability to generate organic production growth and replace reserves at competitive costs for an upgrade to Ba2," Le Guay added.

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