Moody's cuts Ensign Drilling

Moody's Investors Service said it downgraded Ensign Drilling Inc.'s corporate family rating to B3 from B1, probability of default rating to B3-PD from B1-PD, senior unsecured rating to Caa1 from B2 and speculative grade liquidity rating to SGL-3 from SGL-2.

"Ensign's rating downgrade reflects our expectation that EBITDA will decline sharply in 2020 as a result of reduced drilling activity from oil and gas producers, combined with the company's need to extend its revolving credit facility due November 2021," said Jonathan Reid, a Moody's analyst, in a press release.

Moody’s changed the outlook to negative from stable. “The negative outlook reflects Moody's view that Ensign could breach its financial covenants towards the end of 2020 as a result of its increase in leverage and that its credit metrics could deteriorate further if oil and gas producers continue to reduce capital spending,” the agency said.

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