S&P drops Seventy Seven, notes

Standard & Poor's said it lowered its corporate credit rating on Seventy Seven Energy Inc. to B from B+.

The outlook is negative.

At the same time, the agency lowered its issue-level ratings on the company's secured notes to BB- from BB, unsecured notes to B from B+ and structurally subordinated unsecured notes to CCC+ from B-.

The recovery rating on the senior secured notes remains 1, indicating very high (90% to 100%) recovery and the recovery rating on the subordinated notes remains 6, indicating negligible (0% to 10%) recovery in the case of a payment default. The recovery rating on the unsecured notes remains 3, indicating meaningful (50% to 70%; at the lower half of the range) recovery in the case of a payment default.

"The rating outlook on Seventy Seven is negative, reflecting the potential for a downgrade if FFO to debt weakens further from currently expected levels or if liquidity deteriorates," S&P credit analyst Carin Dehne-Kiley said in a news release. "This would most likely occur if demand for oilfield services does not recover in 2016, as we currently anticipate."

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