S&P upgrades Callon Petroleum

S&P said it raised its rating on Callon Petroleum Co. to B+ from B and the issue-level rating on its unsecured debt to BB- from B+. The 2 recovery rating (70%-90%; rounded estimate: 85%) on the unsecured debt remains unchanged.

“The company paid down the borrowings on its revolving credit facility, reducing the amount outstanding as of year-end 2022 to $503 million (about 34% drawn relative to the $1.5 billion commitment), and recently extended the revolver to October 2027. Given Callon's $2 billion near-term debt target, we believe it will continue to use most of the FOCF it generates this year to further pay down its revolver borrowings or redeem its $187 million of unsecured notes due 2025, which management has previously stated it intends to do in 2023,” S&P said in a statement.

If Callon redeems the 2025 notes, it will push the next maturity to the $321 million of notes due July 2026, the agency said.

“We project Callon's average FFO to debt will remain above 60% and its debt to EBITDA will remain below 1.5x over the next two years and believe its FOCF generation could surpass $400 million in 2023 and approach similar levels in 2024 (depending on its capital spending and prevailing oil and gas prices),” S&P said.

The outlook is stable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.