Moody’s reviews Callon for upgrade

Moody's Investors Service said it placed Callon Petroleum Co.'s ratings on review for upgrade, including its B1 corporate family rating, B1-PD probability of default rating and B2 senior unsecured notes rating. Previously, the outlook was stable. The SGL-2 speculative grade liquidity rating remains unchanged.

The review follows APA Corp. agreeing to buy Callon in a $4.5 billion all-stock deal, including Callon’s net debt. APA is the parent of Apache Corp. The deal is expected to close during the second quarter of 2024, subject to regulatory approvals and approvals from both Callon and APA shareholders, and customary closing conditions.

“Callon's ratings were placed on review for upgrade based on its potential ownership by APA, which has a much stronger credit profile, larger and more diversified asset base and greater financial resources. Callon's sizeable Permian Basin acreage is highly complementary to APA's and will significantly improve APA's production and acreage position in this attractive basin – its core operating area and an important engine for its growth,” Moody’s said in a press release.

Assuming APA repays Callon’s debt, Moody’s said it will withdraw all the company’s ratings.

“If Callon's notes remain outstanding and are assumed or guaranteed by Apache, then the ratings on the notes would be upgraded to Apache's rating level. If Callon were to become an unguaranteed subsidiary of Apache post-acquisition and continue to provide separate audited financial statements going forward, then its ratings would likely be upgraded based on the level of parental support,” Moody’s explained.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.