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Wednesday, August 26, 2015

Ascent Resources, Formerly Part of American Energy Partners, Receives Lowest Credit Rating from Moody's

For Aubrey McClendon and his current company, the bad news keeps on coming.  Ascent Resources, which recently broke off from parent company American Energy Partners, does not have a very positive financial outlook, according to Moody's Investors Service.

From Moody's:
Moody's Investors Service, ("Moody's") downgraded Ascent Resources -- Marcellus, LLC's (ARM) Corporate Family Rating (CFR) to Caa2 from B2, Probability of Default Rating (PDR) to Caa2-PD from B2-PD, Senior Secured First Lien rating to Caa1 from Ba3 and Senior Secured Second Lien rating to Caa3 from Caa1. Moody's also lowered the Speculative Grade Liquidity Rating to SGL-4 from SGL-3 to underscore weak liquidity. The rating outlook is negative. 
"The downgrade reflects our view that ARM has an unsustainable capital structure and that it will struggle with weak liquidity and limited cash flow generation in a low commodity price environment," said John Thieroff, Moody's VP-Senior Analyst. "While we anticipate the company will be able to fully access its currently restricted cash balances through an equity infusion by the company's sponsors, the absence of additional external sources of liquidity and the expectation of persistent low oil and natural gas prices call into question ARM's ability to cover its interest expense or fund capital spending in the second half of 2016." 
..Downgraded:.... Corporate Family Rating, Downgraded to Caa2 from B2.... Probability of Default Rating, Downgraded to Caa2-PD from B2-PD.... Senior Secured First Lien Bank Credit Facility, Downgraded to Caa1(LGD3) from Ba3(LGD2).... Senior Secured Second Lien Bank Credit Facility, Downgraded to Caa3(LGD5) from Caa1(LGD5).... Speculative Grade Liquidity Rating, Lowered to SGL-4 from SGL-3. Outlook changed to Negative from Stable
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