S&P ups Enquest

S&P said it raised its issuer credit rating on EnQuest plc and the rating on its unsecured debt to B- from CCC+, and removed them from CreditWatch, where it placed them with positive implications in February.

“EnQuest's new reserve-based lending (RBL) facility will remove liquidity risk, which is the key consideration for the upgrade,” S&P said in a press release.

The company will use the new facility to refinance some of its debt facilities.

“We expect positive free operating cash flow (FOCF) will enable the company to further reduce its debt. According to the terms of the RBL, EnQuest will need to repay the new facility ahead of the unsecured bonds' maturity in October 2023, unless refinanced earlier. Based on our expectation of Brent oil price of $65/bbl for the rest of 2021 and $60/bbl in 2022, we expect EnQuest to generate sufficient cash to be able to amortize the facility as required,” S&P said in a press release.

The agency said it sees credit metrics remaining healthy for the rating in 2021 and in 2022, with funds from operations (FFO) to debt above 20%, and debt to EBITDA at about 4x (pro forma the acquisition of the Golden Eagle assets).

The outlook is stable.

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