S&P drops Matador Resources

S&P said it downgraded Matador Resources Co. to B- from B+.

The outlook is negative.

The agency said it expects Matador Resources’ cash flow and leverage metrics will weaken materially from previous expectations following the recent collapse in oil prices and S&P’s significant downward revisions to its oil price assumptions.

“Although currently adequate, we believe Matador's liquidity position could deteriorate if oil prices remain weak for a prolonged period, given the current balance drawn on its credit facility, limited hedging, and projected negative free operating cash flow (FOCF),” the agency said in a news release.

The agency also lowered the issue-level rating on the company's senior unsecured notes to B from BB-. The 2 recovery rating indicates an expectation for substantial (70%-90%; rounded estimate: 80%) recovery of principal in the event of a payment default.

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