S&P gives Lucid Energy B+, loan BB-

S&P said it assigned its B+ long-term corporate credit rating to Lucid Energy Group II Holdings LLC.

The outlook is stable.

At the same time, the agency assigned a BB- issue-level rating and to Lucid Energy Group II Borrower LLC's $900 million senior secured first-lien term loan due 2025. The 2 recovery rating indicates lenders can expect substantial (70%-90%; rounded estimate 70%) recovery in a default scenario.

“Our rating on Lucid reflects the volumetric risk inherent in the operations, lack of geographic diversity (with operations in only one basin), a relatively small scale of operations and a highly leveraged capital structure,” S&P said in a news release.

“The Permian Basin's favorable economics, long-term fixed-fee contracts with a diverse group of well-capitalized, investment-grade counterparties and the credit facilities project finance-style structure and excess cash flow sweep, which accelerates the deleveraging efforts, partially offset these credit risks.”

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