S&P cuts Athabasca Oil view to negative

Standard & Poor's said it revised its outlook on Athabasca Oil Corp. to negative from developing.

At the same time, S&P affirmed its CCC+ long-term corporate credit rating and B issue-level rating on the company's US$550 million senior secured debt. The recovery rating on the debt is unchanged at 1, which indicates an expectation of very high (90%-100%) recovery in a simulated default scenario.

"When we assigned our CCC+ corporate credit rating, we expected the company would receive full regulatory approval for the Dover oil sands project by March 2013, and exercise the put option to sell its 40% stake to its joint-venture partner, Phoenix Energy Holdings Inc., for the contractually agreed proceeds of C$1.32 billion," said S&P credit analyst Michelle Dathorne in a news release.

The proceeds from this sale represented a material component in S&P's forecasted liquidity for the company and were to fund the majority of Athabasca's capital spending during S&P's forecast period.

"We believe the delay in receiving final regulatory approval and completing the asset sale has materially weakened the company's 2014-2015 liquidity profile," the agency said.

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