Fitch gives Sitio B+, notes BB-

Fitch Ratings said it gave a first-time B+ long-term issuer default rating to Sitio Royalties Operating Partnership, LP with a stable outlook. The agency also assigned BB-/RR3 senior unsecured ratings to Sitio's planned notes to be co-issued with Sitio Finance Corp.

“Sitio's rating reflects the limited scale of its cashflows relative to oil and gas peers, lack of control over future reserves development on its oil and gas properties, possible M&A transactions, limited proved developed reserve life and generous dividend policy. Its credit profile is supported by very low opex and no capex, stronger resilience during commodity price downswings than that of upstream producers, and Fitch-projected midcycle leverage around 1.5x,” the agency said in a statement.

The proceeds will be used to repay the notes, reduce the draw on its reserve lending-based facility and for general corporate purposes.

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