S&P assigns B to GEP Haynesville notes

S&P said it assigned its B corporate issuer rating to GEP Haynesville LLC. The outlook is stable.

At the same time, S&P assigned a B issue-level rating to GEP Haynesville's proposed $600 million senior unsecured notes due 2023. The recovery rating on the notes is 3, indicating an expectation of meaningful (50% to 70%; rounded estimate: 50%) recovery to creditors in the event of a payment default.

“Our rating on GEP Haynesville reflects the company's participation in the cyclical and capital-intensive E&P industry, its small proved reserve and production base that is entirely concentrated on natural gas in the Haynesville shale, a 57% proportion of proved undeveloped reserves (PUDs), a relatively low reserve life, and a fairly short operating history,” S&P said in a news release.

“The rating also incorporates its relatively low natural gas price differentials, long-term transportation contracts, and active hedging program, which we view as advantageous.”

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