S&P: Stone Energy on watch

Standard & Poor's said it revised the CreditWatch implications on the Stone Energy Corp. ratings to negative from developing, following Stone Energy's announcement that it had entered into a definitive merger agreement with Energy Partners Ltd. (B+/Watch negative) and had terminated its existing agreement with Plains Exploration & Production Co. (BB/Watch negative).

S&P noted that the negative CreditWatch listing for Stone Energy reflects the potential that ratings will be lowered or affirmed in the near term, adding that it incorporates concerns that leverage for the combined entity will meaningfully worsen after effecting the transaction.

Despite increased-scale in both reserves and daily production, pro forma leverage is not expected to be consistent with the current Energy Partners rating, the agency added.

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