Moody's rates Centennial notes B3

Moody's Investors Service said it affirmed the B1 corporate family rating, B1-PD probability of default rating, B3 (LGD 5) senior unsecured ratings on existing debt and SGL-3 speculative liquidity rating on Centennial Resource Production, LLC.

Moody's also said it assigned a B3 rating on Centennial's proposed senior unsecured notes, which is the same level as the existing senior unsecured notes.

The outlook remains stable.

The ratings recognize the company's prudent approach to managing investment and production growth amid oil price volatility and the company's focus on preserving strong balance sheet and financial flexibility, Moody's said.

The agency said it rated Centennial's senior unsecured notes B3, at the same level as the existing notes and two notches lower than its B1 corporate family rating given the significant amount of secured debt in the capital structure.

The ratings are underpinned by the company's substantial acreage and reserves positions in the prime oil rich areas of the Delaware Basin, Moody's said, and strong management team with proven execution track record and technical knowledge of the basin.

The ratings are constrained by the company's high volatility in earnings due to unhedged exposure to oil prices, the agency said.

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