S&P gives B+ to Karoon Energy notes

S&P said it assigned its B long-term issuer credit rating to Karoon Energy Ltd. and B+ long-term issue rating to the company’s proposed senior secured second-lien notes. The 2 recovery rating on the notes indicates an expectation of substantial recovery (rounded estimate: 80%) in the event of a default.

The outlook is stable.

Karoon Energy is planning to issue five-year senior secured second-lien notes of US$400 million. It will use the proceeds to diversify debt funding sources, lengthen its maturity profile, and repay the drawn amount (US$274 million as of Dec. 31, 2023) in its existing US$340 million reserve-based lending facility, S&P said in a news release.

“The stable rating outlook incorporates our view that Karoon will maintain its financial discipline as it seeks to increase production and reserves through asset enhancements, developments, and strategic asset acquisitions,” S&P said in the release.

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