Fitch rates Encino Acquisition notes B

Fitch Ratings said it Encino Acquisition Partners Holdings, LLC's and Encino Acquisition Partners, LLC's long-term issuer default ratings at B.

The agency assigned a B/RR4 rating to Encino's proposed $500 million new senior unsecured 2031 notes, in line with Encino's existing senior unsecured debt ratings.

The new issuance will be used to reduce current drawings under the company’s revolving credit facility.

Fitch also affirmed the existing senior unsecured 2028 notes at B/RR4.

The outlook is stable.

The agency said the ratings reflect the company's sizable Utica Basin position; competitive unit economics; ability to effectively transport gas out of the basin to advantaged price points; long-dated debt maturity, with leverage expected to remain below 2.0x over Fitch's forecast; adequate liquidity; and strong hedge profile.

These considerations are offset by the company's current inability to generate material positive free cash flow and relatively high firm transportation costs, Fitch said.

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