(The following statement was released by the rating agency)
Oct 10 - Standard & Poor's Ratings Services today raised its issue rating on Endeavour International Corp.'s first priority notes to 'CCC+' from 'CCC'. At the same time, we revised the recovery rating on this debt to '5', indicating our expectation for modest recovery (10% to 30%) in the event of a payment default, from '6' (see list).
The rating action reflects a higher value of the company's reserves supported by higher commodity price assumptions in our distressed price scenario.
Endeavour plans to issue $54 million of 12% first priority notes due 2018 as an 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 2014 and for general corporate purposes.
For the complete recovery analysis, see Standard & Poor's recovery report on Endeavour to be published on RatingsDirect immediately following the release of this report.
The ratings on Endeavour reflect Standard & Poor's assessment of the company's "vulnerable" business risk and "highly leveraged" financial risk. The ratings on Endeavour incorporate its small reserve and production base, its geographic focus on the North Sea, and its participation in the competitive and highly cyclical oil and gas industry. The ratings on the company also reflect its strong reserve replacement metrics and liquidity that should enable the company to fund its 2012 and 2013 capital expenditures. In addition, given the current price of hydrocarbons, it is highly favorable that the company's reserves are focused on oil and the majority of its gas assets are in the North Sea, which has much higher natural gas prices than natural gas in the U.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 List Endeavour International Corp. Corporate credit rating B-/Stable Ratings Raised To From $350 first priority notes due 2018 CCC+ CCC Recovery rating 5 6
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at
. All ratings affected by this rating action can be found on Standard & Poor's public Web site at . Use the Ratings search box located in the left column. (New York Ratings Team)