S&P rates SESI notes BB+

Standard & Poor's said it assigned SESI LLC's $400 million of senior notes due 2019 a BB+ rating and a 4 recovery rating, indicating the expectation of average (30% to 50%) recovery in a payment default.

The notes are guaranteed by Superior Energy Services Inc. and substantially all of its current domestic subsidiaries. Superior will use proceeds from the new notes to pay down borrowings outstanding under the revolving facility and for cash on hand.

The ratings on the company reflect its operational and geographic diversity, modest financial measures and flexible capital expenditure budget, which allows it to operate within its cash flow, the agency said.

The ratings incorporates the company's exposure to the historically cyclical oil and gas industry, the relatively limited scope of its business compared with its larger investment grade peers and the uncertainty associated with the pickup in the weak Gulf of Mexico drilling activity, the agency added.

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