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S&P puts Southwestern Energy on negative watch
Standard & Poor’s said it placed the BBB corporate credit and senior unsecured debt ratings on Southwestern Energy on CreditWatch with negative implications.
The negative watch placement follows news that Southwestern Energy’s has agreed to acquire producing oil and gas assets in West Virginia and southwest Pennsylvania from Chesapeake Energy for $5.375 billion.
The assets are prospective for the Marcellus shale, Utica shale and Upper Devonian.
The CreditWatch negative listing reflects the potential for a one-notch downgrade following the closing of the acquisition, depending on the amount of debt and equity financing, S&P said.
The agency said it assumes at least 20% of the transaction will be funded with equity.
The proposed acquisition moderately strengthens Southwestern Energy’s business risk profile due to the company’s larger scale, modestly improved geographic diversification and potential for improved profitability because the company will have increasing exposure to oil and natural gas liquids, S&P said.
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