Moody's upgraded Colorado-based oil and gas driller PDC Energy Inc.'s corporate family rating to Ba2 from Ba3 on Jan. 14 and raised its probability of default rating to Ba2-PD from Ba3-PD. The outlook is stable.
The rating agency also upgraded the ratings of PDC Energy's senior unsecured notes and convertible notes to Ba3 from B1. The company's speculative-grade liquidity rating was changed to SGL-1 from SGL-2. The ratings actions complete a review initiated Aug. 27, 2019, for a possible upgrade.
Moody's vice president Arvinder Saluja said the upgrade reflects PDC Energy's increased scale in the DJ Basin and improved credit metrics following its recently completed acquisition of fellow Colorado-based oil and gas driller SRC Energy Inc., which Saluja said has highly complementary assets and meaningfully increases reserves and production.
In announcing the deal in August 2019, the companies said the $1.7 billion all-stock merger would create the second-largest producer operating in the DJ Basin.
The stable outlook comes from Moody's expectation that PDC Energy will continue to maintain strong cash flow-based leverage metrics and capital efficiency metrics.