TEXT-S&P rates Carrizo Oil & Gas notes 'B'
Sept 5 - Standard & Poor's Ratings Services said today that it assigned its 'B' issue-level rating to Carrizo Oil & Gas Inc.'s proposed $250 million senior unsecured notes due 2020. The recovery rating on the notes is '4', indicating our expectation of average (30% to 50%) recovery in the event of a payment default. The 'B' corporate credit rating on Carrizo and stable outlook are unaffected. Carrizo intends to use the net proceeds from the proposed offering to repay borrowings outstanding under the company's revolving credit facility and for general corporate purposes. The ratings on Carrizo continue to reflect our view of the company's "aggressive" financial risk and "vulnerable" business risk. These assessments reflect Carrizo's exposure to weak natural gas, which remains the company's principal product, the company's modest-sized reserve and its high spending levels in excess of projected operating cash flows to develop its Eagle Ford acreage. The ratings also reflect the company's increasing exposure to robust crude oil prices and our expectation that leverage will remain within an acceptable range for the rating, because sustained production growth of oil and liquids and a conservative hedging policy should support future cash flow generation. RELATED RESEARCH AND CRITERIA -- Assumptions: Revised Assumptions For Assigning Recovery Ratings To The Debt Of U.S. Oil And Gas Exploration And Production Companies, Sept. 30, 2010 -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009. -- Corporate Ratings Criteria 2008, published April 15, 2008. RATINGS LIST Carrizo Oil & Gas Inc. Corporate credit rating B/Stable/-- New Rating Proposed $250 mil sr unsecd nts due 2020 B Recovery rating 4
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