Moody’s trims EnQuest

Moody’s Investors Service said it downgraded EnQuest plc’s corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD, as well as the ratings assigned to the $677.5 million of high yield notes due 2022 to Caa2 from Caa1.

The agency changed the outlook to stable from ratings under review.

The downgrade and outlook change conclude the review for downgrade started on March 25, Moody’s said.

“The rating downgrade reflects Moody’s expectation that despite the rebound in oil prices since mid-April and the significant cuts in operating costs and capital expenditure initiated by EnQuest in order to lower its free cash flow (FCF) breakeven to $33/barrel (bbl) for 2020, which equates to c.$25/bbl for the remainder of the year, and $27/bbl for 2021, an extended period of low oil prices averaging $35/bbl over the 2020-2021 period would require approximately a third of the final amortization of $360 million due under the group’s credit facility in October 2021 to be refinanced,” said Moody’s in a press release.

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