S&P turns Forum Energy view to positive

S&P said it changed its outlook for Forum Energy Technologies Inc. to positive from stable and affirmed its CCC+ ratings on the issuer and its 9% convertible secured notes due in 2025. The 4 recovery rating is unchanged and reflects average (30%-50%; rounded estimate: 45%) recovery in default.

“Forum's activity is highly correlated to the active rig count in the U.S., given its broad suite of products used in the drilling and completion process. The U.S. rig count has increased more than 50% in the past 12 months, and we expect it to continue to rise at least through 2023 based on our commodity price outlook and commentary from land rig operators. We anticipate Forum's revenues will increase 25%-30% in 2022 from a combination of increased activity and net pricing gains,” S&P said in a press release.

The agency said it estimates Forum’s average FFO to debt in the 12%-16% range in 2022 and 2023 and average debt to EBITDA of about 4.5x.

“The positive outlook reflects our view that we could raise our ratings on Forum over the next 12 months if its credit measures continue to improve, such that we expect FFO to debt comfortably above 12% on a sustained basis and the company maintains adequate liquidity,” S&P said.

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