July 25, 2012 / 8:39 PM / 5 years ago

TEXT-S&P raises CrownRock LP ratings

 (The following statement was released by the rating agency)
 July 25 - Standard & Poor's Ratings Services said today that it raised its
senior unsecured debt ratings on Midland, Texas-based CrownRock LP to 'B' (one
notch higher than the corporate credit rating) from 'CCC+'. We simultaneously
revised the recovery rating on these notes to '2', indicating our expectation of
substantial (70% to 90%) recovery in the event of a payment default, from '5'. 

The revised recovery reflects changes to CrownRock's reserve values following 
a company-provided PV-10 report using mid-year 2012 reserves at our stressed 
pricing assumptions of $45 per barrel of West Texas Intermediate (WTI) crude 
oil and $4.00 per million British Thermal Units (BTU) of Henry Hub natural 
gas. For the complete recovery analysis, see our recovery report on CrownRock 
to be published on RatingsDirect following the release of this report.

The corporate credit rating on CrownRock reflects its small oil and gas 
reserve and production base as an independent E&P company. The ratings also 
incorporate the company's aggressive capital spending requirements to hold its 
acreage, a high percentage of undeveloped reserves, its participation in a 
volatile and commodity-based industry, and reliance on one basin (the 
Wolfberry region of the Permian Basin) for its production growth and cash 
flows. These negative credit factors are only partially buffered by an 
oil-weighted reserve profile and a competitive cost structure. We consider 
CrownRock's business risk to be "vulnerable" and its financial profile to be 
"highly leveraged".

  -- Credit FAQ: Why Standard & Poor's Revised Its Assumptions For Recovery 
Analysis On Exploration And Production Companies, Nov. 3, 2010.
  -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009.

CrownRock LP
 Corporate credit rating               B-/Stable/--

Ratings Raised; Recovery Rating Revised
                                    To          From
CrownRock LP
CrownRock Finance Inc.
 Senior unsecured debt ratings         B           CCC+
  Recovery rating                      2           5

 (Caryn Trokie, New York Ratings Unit)

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