Moody’s assigns B1 to Sitio, notes B3

Moody's Investors Service said it assigned first-time ratings to Sitio Royalties Corp., including a B1 corporate family rating, a B1-PD probability of default rating, an SGL-3 speculative grade liquidity rating, indicating adequate liquidity and a B3 rating to the company's planned $500 million of senior unsecured notes to be issued by Sitio Royalties Operating Partnership, LP due 2028.

"Sitio's B1 CFR balances the company's strong cash margins and limited operating and capital costs against its relatively small scale and high leverage," said Thomas Le Guay, a Moody's vice president, in a press release. "Sitio will need to demonstrate a track record of adhering to its stated financial policies, considering its short operating history and highly acquisitive nature."

Sitio will use the proceeds to repay the company's unrated senior unsecured notes and borrowings on its unrated credit facility that were used to finance prior acquisitions. Pro forma for the refinancing, Sitio will have $1 billion of debt outstanding, a production base of roughly 36 thousand barrels of oil equivalent per day (Mboe/d), total proved reserves of 83 million boe, of which 84% are proved developed, and exposure to 275 thousand net royalty acres across the most prolific parts of the Permian Basin (72%), the DJ Basin (9%) and the Eagle Ford Shale (8%), the agency noted.

The outlook is stable for both entities.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.