S&P revises Stone recovery

Standard & Poor's said it revised its recovery rating on Stone Energy Corp.'s 8 5/8% senior unsecured notes due 2017 to 4, indicating an expectation of average (30% to 50%) recovery in the event of a payment default, from 3 and affirmed the issue rating on the bonds at B.

The outlook is stable.

The rating action follows a proposed $100 million add-on to the notes, which will now total $375 million.

The agency said its recovery analysis incorporates Stone's plans to use the proceeds from the proposed notes offering to repay outstanding balances under its secured revolving credit facility and provide additional liquidity for future spending needs.

The B corporate credit rating reflects the company's limited scale, concentration in the mature U.S. Gulf of Mexico shelf region, requirements for significant reinvestment to maintain production levels, poor internal reserve replacement and relatively high cost base, S&P said.

The ratings on Stone also reflect the favorable outlook for crude oil prices and healthy credit metrics, the agency added.

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