S&P lowers Gavilan

S&P said it downgraded Gavilan Resources LLC and its term loan to CCC- from CCC+ and changed the loan’s recovery rating to 4 from 3.

“Due to the sharp drop in oil and natural gas prices driven by the Saudi-Russia price war and the drop in demand related to Covid-19, as well as the ongoing bankruptcy proceeding of its joint venture partner Sanchez Energy, Gavilan Resources faces a material liquidity deficit when the borrowing base on its RBL facility is redetermined in April,” said S&P in a press release.

Gavilan borrowed the full $200 million available on its facility, and S&P said it expects the borrowing base to be redetermined lower, resulting in a deficiency.

The outlook is negative.

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