(The following statement was released by the rating agency)
Oct 10 - Standard & Poor's Ratings Services today raised its issue rating onEndeavour International Corp.'s first priority notes to 'CCC+' from 'CCC'. Atthe same time, we revised the recovery rating on this debt to '5', indicatingour expectation for modest recovery (10% to 30%) in the event of a paymentdefault, from '6' (see list).
The rating action reflects a higher value of the company's reserves supportedby higher commodity price assumptions in our distressed price scenario.
Endeavour plans to issue $54 million of 12% first priority notes due 2018 asan add on to its $350 million of first priority notes that it issued on Feb.23, 2012. The company will use proceeds to redeem subordinated notes due 2014and for general corporate purposes.
For the complete recovery analysis, see Standard & Poor's recovery report onEndeavour to be published on RatingsDirect immediately following the releaseof this report.
The ratings on Endeavour reflect Standard & Poor's assessment of the company's"vulnerable" business risk and "highly leveraged" financial risk. The ratingson Endeavour incorporate its small reserve and production base, its geographicfocus on the North Sea, and its participation in the competitive and highlycyclical oil and gas industry. The ratings on the company also reflect itsstrong reserve replacement metrics and liquidity that should enable thecompany to fund its 2012 and 2013 capital expenditures. In addition, given thecurrent price of hydrocarbons, it is highly favorable that the company'sreserves are focused on oil and the majority of its gas assets are in theNorth Sea, which has much higher natural gas prices than natural gas in theU.S.
RELATED CRITERIA AND RESEARCH
-- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
-- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18,2012
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Ratings ListEndeavour International Corp.Corporate credit rating B-/StableRatings RaisedTo From$350 first priority notes due 2018 CCC+ CCCRecovery rating 5 6
Complete ratings information is available to subscribers of RatingsDirect onthe Global Credit Portal at
. All ratings affectedby this rating action can be found on Standard & Poor's public Web site at. Use the Ratings search box located in the leftcolumn.(New York Ratings Team)