S&P rates Gavilan CCR B, loan BB-

S&P said it assigned its B corporate credit rating to Gavilan Resources LLC.

The outlook is stable.

At the same time, the agency assigned its BB- issue-level rating and 1 recovery rating to the company's $350 million second-lien term loan due 2024. The 1 recovery rating indicates an expectation of very high (90% to 100%) recovery to creditors in the event of a payment default.

Proceeds will be used to fund a portion of the company’s $1.1 billion acquisition of oil and gas producing properties in the Eagle Ford shale (South Texas).

"The stable outlook reflects our expectation that Gavilan Resources will be able to successfully grow production and reserves on the acquired properties and deepen its management team, while maintaining funds from operations to debt of around 20% and adequate liquidity," S&P credit analyst Carin Dehne-Kiley said in a news release.

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