S&P moves SM Energy outlook to positive

S&P said it changed SM Energy Co.’s outlook to positive from stable and affirmed the B+ issuer rating, the BB rating on the company’s senior secured notes and the BB- rating on its senior unsecured notes.

“Our outlook revision reflects the company's improved free cash flow and credit measures under our revised commodity price assumptions, which should more than support its goal of achieving net debt of $1 billion, as well as expected growth in proved developed reserves and production in the Austin Chalk,” S&P said in a press release.

The outlook also reflects the position that SM Energy will use positive free cash flow to achieve its long-term net debt target of $1 billion, while continuing to increase proved developed reserves and production from the Austin Chalk, the agency said.

“We expect debt to EBITDA will strengthen well below 1x while FFO to debt will remain well above 100% over the next two years. Additionally, we would expect the company to keep shareholder rewards within cash flows,” S&P said.

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