S&P Global Ratings brought its ratings on QEP Resources Inc. down a notch and may further lower its ratings on the Denver, Colo.-based driller following the company's $735 million sale of Haynesville and Cotton Valley assets.
The rating agency lowered its issuer credit and senior unsecured ratings on QEP to BB- from BB as the company's operations get scaled back, according to a Jan. 11 news release. After the sale of the assets, S&P views QEP to be closer to other BB- companies such as CNX Resources Corp. and Gulfport Energy Corp. The rating agency expects the company to use proceeds from the sale to repay revolver debt, as well as for additional funding for its 2019 capital expenditure program.
S&P also kept the company on CreditWatch with negative implications, as the rating agency fears that the proceeds from the sale may not be able to address upcoming debt maturities. S&P also attributed the negative implication to its belief that the company's scale after the deal may become inconsistent with QEP's current ratings.
QEP on Jan. 10 completed the sale of its northwest Louisiana oil and natural gas upstream and midstream assets to Aethon Energy Management LLC subsidiary Aethon III BR LLC.
Elliott Management on Jan. 7 proposed a buyout of QEP at $8.75 per share, at the time representing a 44% premium over the driller's stock price.
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 in the Sources section.