S&P rates Mission Resources notes

Standard & Poor's said it assigned its B- corporate credit rating to independent oil and gas exploration and production company Mission Resources Corp. and its CCC rating to Mission's proposed $130 million senior unsecured notes due 2011.

The outlook is negative.

"Proceeds from the unsecured note offering along with borrowings under a new $100 million ($50 million borrowing base) senior secured revolving credit facility and a $25 million senior secured second-lien term loan will be used refinance outstanding debt," noted S&P credit analyst Steven K. Nocar.

S&P said the ratings on Mission reflect its participation in the volatile, cyclical, and capital-intensive exploration and production segment of the petroleum industry, with aggressive leverage, a small reserve base, very high operating expenses, and a low percentage of company-operated properties (35%).

These risks are modestly diminished by the company's hedging activities, which buffer cash flow in the near term from falling commodity prices, the agency added.

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