Moody's rates Mariner notes B3

Moody's Investors Service said it assigned a B2 corporate credit rating to Mariner Energy Inc. and a B3 rating to the company's proposed $250 million senior unsecured notes offering. The outlook is stable.

Proceeds from the notes offering will be used to repay borrowings under the company's senior secured revolving credit facility.

Moody's said the ratings reflect the high-cost, short-lived asset base of the pro forma exploration and production business, the company's full leverage on the proven developed reserve base given its size and Gulf of Mexico concentration, the need for management to demonstrate that it can successfully integrate the new properties and that it can stabilize and grow the historically inconsistent sequential quarterly production trends, the currently low percentage of production coming from the more durable and longer-lived West Texas assets and the higher cost, higher risk and lumpy nature of the deepwater Gulf of Mexico assets.

The ratings are supported by the enhanced scale derived from the Forest Gulf of Mexico assets acquisition, a degree of diversification from Mariner's longer-lived West Texas properties, the company's standalone track record of reserve growth, a seasoned management team and the still supportive commodity price outlook, the agency said, which should provide cover for the fairly high costs structure over the near-term.

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