S&P Global Ratings lowered its issuer credit rating on U.S.-based oil and gas exploration and production (E&P) company Chaparral Energy Inc. to ‘D’ from ‘CCC-’.
At the same time, S&P lowered its issue-level ratings on the company’s unsecured notes to ‘D’. S&P’s ’6′ recovery rating (0%-10%; rounded estimate: 0%) on the unsecured notes remains unchanged.
The downgrade reflects Chaparral’s entry into a 30-day grace period after missing a $13.1 million interest payment due under its 8.75% unsecured notes due 2023. The company also entered into a forbearance agreement with lenders that expires on July 29. The agreement stipulates that Chaparral deliver a 13-week rolling operating budget by July 24 and must unwind its hedges in order to pay down borrowings under its revolving credit facility. The company is also engaging in discussions with creditors around a comprehensive restructuring. S&P expects to withdraw the ratings after 30 days.