Fitch assigns Double Eagle B, notes BB-

Fitch Ratings said it assigned a first-time long-term issuer default rating of B with a positive outlook to Double Eagle III Midco 1 LLC. Also, Fitch gave issue-level ratings of BB-/RR2 to Double Eagle's proposed $650 million of senior unsecured notes.

“Double Eagle's ratings reflect its core Permian asset base, high working and net revenue interest resulting from the company's royalty and mineral interest ownership, competitive cost structure supported by midstream integration, and healthy hedge coverage providing near-term liquidity and netback protection. Fitch expects Double Eagle's growth strategy to result in significant near-term negative FCF, and entail some execution risk given management's relatively short development track record and, albeit not a meaningful near-term target, approximately 30% of identified drilling inventory is in more prospective Permian formations,” Fitch said in a press release.

The outlook reflects Double Eagle's forecast ability to realize a significant increase in size/scale, including production and PDP wedge expansion and transition and proximity to positive FCF generation over the next 18-24 months, the agency said.

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