S&P Global Ratings downgraded its ratings by two notches on Alta Mesa Resources Inc. after the Anadarko Basin-focused driller's announcement that it is replacing its senior management team, coupled with its failure to achieve operational goals and the effects of falling crude oil prices.

The rating agency lowered its issuer credit rating on Alta Mesa and that of subsidiary Alta Mesa Holdings LP, as well as its issue-level rating on Alta Mesa Holdings' senior unsecured debt, to CCC+ from B, according to a Dec. 27 news release. The outlook is developing.

With Alta Mesa's management changes, particularly the resignation of its CEO and COO, S&P sees "operational inconsistencies" and uncertainty regarding the business' future direction and financial performance. The crude price slump and Alta Mesa's weak stock performance further contributes to the uncertainty, S&P said.

Because of the low price of its bonds, Alta Mesa could enter into an exchange offer that would classify as a selective default under S&P's criteria. Alta Mesa is due to release an updated operational and financial strategy in early 2019, upon which S&P may lower or raise its ratings on the company depending on the new management team's strategy.

"We could lower our rating on Alta Mesa if the company resumes its strategy of aggressively increasing its reserves and production without putting an adequate financing plan in place that would allow it to maintain sufficient liquidity," S&P said in the release.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.