Moody’s rates Callon notes B3

Moody's Investors Service said it assigned a B3 rating to Callon Petroleum Co.’s proposed senior unsecured notes due 2026 and changed the outlook to positive from stable.

The agency also affirmed the existing ratings, including the B2 corporate family rating, B2-PD probability of default rating and the B3 rating on the existing notes due 2024.

The speculative grade liquidity rating was downgraded to SGL-3 from SGL-2.

Proceeds from the proposed notes offering will be partially used to fund Callon's recently announced acquisition of acreage in the Delaware Basin and for general corporate purposes.

"Callon's acquisition will more than double its presence in the Delaware Basin and the existing production volumes will modestly contribute to its cash flow from operations," Moody's vice president James Wilkins said in a news release.

"The equity financing of one-half of the acquisition purchase price is a positive that limits the increase in Callon's leverage."

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