Fitch raises WaterBridge Midstream

Fitch Ratings said it upgraded WaterBridge Midstream Operating LLC's (Watope) senior secured ratings to B+/RR3 from B/RR3 and long-term issuer default rating to B from B-.

The upgrade is driven by Watope's strong performance in 2022 continuing into 1H23 benefitting from continued strong producer activity on Watope's acreage. As produced water volumes have grown, Watope achieved EBITDA leverage below 7x at YE 2022 while maintaining interest coverage above 2x.

“Additionally, Watope in the spring of 2023 extended the expiration date of its revolving credit facility to June 2025. Concerns include preferred issuances above Watope which have terms which require for credit maintaining quality, management to be proactive with liquidity toward the end of the outlook horizon, the company's small size, and concentration within the Delaware Basin,” Fitch said in a press release.

The outlook is stable.

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