Moody’s downgrades Samchully

Moody’s Investors Service said it downgraded Samchully Midstream’s corporate family rating to B3 from B1, probability of default rating to B3-PD from B1-PD and the senior secured term loan rating to B3 from B1.

The speculative grade liquidity rating was withdrawn.

The outlook was changed to negative from stable.

The downgrades reflect the credit deterioration of the company’s limited customer base and the decision of these upstream counterparties to halt drilling operations on their dedicated acreage, Moody’s said.

The agency said it expects that the company’s throughput volumes will fall well below previously expected levels in the second half of 2016 and continue to drop through 2017.

As a result, leverage will likely increase to more than 6x by the end of 2017, Moody’s said.

The company’s ratings also consider its relatively small scale and concentrated operations in the Utica shale with only three upstream counterparties, as well as an expectation that leverage will rise to more than 6x by the end of 2017, the agency said.

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