TEXT-S&P puts Black Elk Energy Offshore rtgs on watch negative

Nov 21 - Overview
-- U.S. oil and gas exploration and production (E&P) company Black Elk
Energy Offshore LLC had an explosion and fire on one of its Gulf of Mexico oil
platforms.
-- We are placing our ratings on CreditWatch with negative implications,
reflecting the potential for further weakening of the company's credit profile
and liquidity.
-- We will resolve the CreditWatch when we have a clearer understanding
of the accident's impact on Black Elk's financial position.

Rating Action
On Nov. 21, 2012, Standard & Poor's Ratings Services placed its ratings,
including its 'CCC+' long-term corporate credit ratings, on Houston-based
Black Elk Offshore Operations LLC (Black Elk) on CreditWatch with negative
implications.
Rationale
The CreditWatch follows an accident on one of Black Elk's oil production
platforms in shallow Gulf of Mexico water that resulted in an explosion and
fire. The accident injured several workers and caused one confirmed death. The
financial effect of the accident on the company is not yet clear. While we do
not expect it to materially affect oil and gas production or cash flow, Black
Elk has very limited liquidity and we believe little capacity to absorb
unexpected expenses or incurred liabilities. We expect to resolve the
CreditWatch when we have more information about the potential costs and the
company's ability to weather them.

The ratings on Black Elk reflect our view of its "vulnerable" business risk
and "highly-leveraged" financial risk, incorporating the company's small
reserve and production base, high operating costs, and acquisitive growth
strategy. The company is geographically concentrated in the Gulf of Mexico
region, and operates in a highly cyclical, capital-intensive, and competitive
industry.
CreditWatch
The CreditWatch reflects the potential for Black Elk's liquidity to
deteriorate further. We would consider a negative rating action if the company
faces additional weakening of its liquidity, which could result from costs
related to remediation or penalties related to the platform accident. We would
consider a positive rating action if the company is able to improve liquidity
to about $40 million while maintaining production. Given its current low
level, the company's leverage is not an impediment to positive rating actions.
Related Criteria And Research
-- Key Credit Factors: Global Criteria For Rating The Oil And Gas
Exploration And Production Industry, Jan. 20, 2012
-- Methodology And Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Sept. 28, 2011
-- 2008 Corporate Criteria: Our Rating Process, April 15, 2008

Ratings List
Placed On CreditWatch Negative
To From
Black Elk Energy Offshore Operations LLC
Corporate Credit Rating CCC+/Watch Neg/-- CCC+/Negative/--

Black Elk Energy Finance Corp.
Black Elk Energy Offshore Operations LLC
Senior Secured B-/Watch Neg B-
Recovery Rating 2 2

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.