Fitch lifts Encana, Newfield

Fitch Ratings said it upgraded the ratings of Encana Corp. and Newfield Corp. to BBB from BBB- following the closing of the acquisition of Newfield by Encana.

Fitch also affirmed the short-term issuer default rating for Encana at F3 and withdrawn the rating for Newfield's revolver, as the revolver was terminated upon transaction close.

Both companies were removed from rating watch positive and assigned a stable outlook.

“The upgrades reflect a number of benefits that the acquisition creates for the combined company, including: increased size and scale; efficiency gains from the application of Encana's cube resource development model to the acquired Stack-Scoop position; a faster transition to higher value liquids; improved unit economics; increased geographic and basin diversification; and stronger leverage metrics stemming from the conservative financing of the deal,” Fitch said in a news release.

“Rating concerns are limited and include the company's still sizable gas exposure; some execution risk around asset integration; and a historical track record of negative FCF.”

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