Moody's assigns Solaris B2, notes B3

Moody's Investors Service said it assigned ratings to Solaris Midstream Holdings, LLC, including a B2 corporate family rating, a B2-PD probability of default rating and a B3 rating to its proposed $400 million senior of unsecured notes due 2026.

The notes are rated B3, one notch below the assigned CFR, due to their structural subordination to the company's unrated $200 million senior secured revolving credit facility. The company's revolver benefits from a first-priority claim over the company's assets, the agency said.

The proceeds will be used to reduce Solaris' borrowings under its revolver and repay preferred equity held by ConocoPhillips, its 30% common equity owner and its largest customer.

"We expect Solaris to grow its earnings with limited capex needs as associated water production grows in the northern Delaware basin, where it primarily operates," stated Arvinder Saluja, a Moody's vice president, in a press release. "However, the ratings are constrained by its modest scale and asset concentration in Eddy and Lea counties in New Mexico."

The outlook is stable.

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