TEXT-S&P: BreitBurn Energy note rating unchanged by add-on
Sept 24 - Standard & Poor's Ratings Services said today the 'B' rating on BreitBurn Energy Partners' senior unsecured notes due 2022 would remain unchanged following the company's plan to add $200 million. This brings the total issue amount to $450 million. The recovery rating on the note remains '5', indicating our expectation of modest (10% to 30%) recovery for lenders in the event of default. BreitBurn plans to use the proceeds to refinance borrowings under its credit facility. The ratings on Los Angeles-based oil and gas property developer BreitBurn reflect our assessment of the company's "vulnerable" business risk and "aggressive" financial risk. The ratings incorporate the company's relatively small asset base and production levels, some geographic concentration (about 50% of its total proved reserves are in Michigan), and modest organic growth prospects from its mature asset base. The ratings also take into account its acquisitive strategy as a master limited partnership (MLP) that focuses on maintaining its dividend and its relatively high cost structure compared with other exploration and production (E&P) companies. These risks are adequately mitigated at the rating level by a significant hedge book over the next few years that should help offset natural gas and oil price volatility, a large concentration of proved developed reserves in its asset base, long-lived reserves, and diversity between oil and gas. RELATED RESEARCH AND CRITERIA -- Standard & Poor's Raises Its U. S. Natural Gas Price Assumptions; Oil Price Assumptions Are Unchanged, July 24, 2012 -- Key Credit Factors: Global Criteria For Rating The Oil And Gas Exploration And Production Industry, Jan. 20, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- 2008 Corporate Criteria: Our Rating Process, April 15, 2008 RATINGS LIST BreitBurn Energy Partners Corporate credit rating B+/Stable/-- $450 mil senior unsecured notes due 2022 B Recovery rating 5 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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