Moody's may upgrade Sheridan

Moody's Investors Service said it placed the ratings of Sheridan Investment Partners I, LLC (SIP I), Sheridan Production Partners I-A, LP (Fund I-A) and Sheridan Production Partners I-M, LP (Fund I-M) under review for upgrade following news that the company will divest substantially all of its assets in the South Central Oklahoma Oil Province (SCOOP) play in Oklahoma.

The company has an agreement to divest those assets to a private equity firm for about $264 million, Moody's noted.

Sheridan I intends to use a substantial portion of the net proceeds to repay debt and extend the maturities of its remaining debt outstanding, the agency said.

The company plans to develop the remaining asset base to prepare for further asset monetization, Moody's said.

Although the sale of SCOOP acreage reduces the size and the scale of Sheridan I, the prospect of substantial debt reduction, extension of debt maturity and potential liquidity enhancement materially reduces Sheridan I's risk of default and positions it for credit profile improvement, the agency explained.

Sale of the SCOOP assets will reduce Sheridan I's average daily production by about 30%, Moody's said.

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