S&P rates KCS Energy notes B-

Standard & Poor's said it assigned its B corporate credit rating to KCS Energy Inc. and its B- rating to KCS's proposed $150 million senior unsecured notes due 2012.

Proceeds from the note offering will be used to redeem the company's existing $125 million subordinated notes due 2006, any outstanding bank debt, and for other general corporate purposes.

The outlook is stable.

S&P said the ratings on KCS reflect the company's small geographically concentrated reserve base and high financial leverage. These significant weaknesses are somewhat tempered by the company's significant percentage of company-operated properties (78%) that require modest future development and its moderate reserve life of about 9.6 years, which provides the company some operational flexibility.

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