S&P lowers Forest Oil

Standard & Poor's said it lowered its corporate credit rating on Forest Oil Corp. to B- from B+. The outlook is negative.

At the same time, S&P lowered the issue rating on Forest's senior secured debt to B+ from BB. The recovery rating on this debt remains 1, indicating an expectation of very high (90% to 100%) recovery in the event of a payment default.

S&P also lowered the issue rating on the company's senior unsecured notes to CCC from B-. The recovery rating on this debt remains 6, indicating an expectation of negligible (0% to 10%) recovery in the event of a payment default.

"The negative outlook reflects the potential for a downgrade given the heightened uncertainty of future Eagle Ford production, which could reduce liquidity further," said S&P credit analyst Mark Salierno in a news release.

"A failure of the company to develop the Eagle Ford in 2014, or lower than expected production in Arkansas-Louisiana-Texas, could be a factor. An inability to amend its credit facility, given the potential for covenant violations in mid-2014, could also lead to a downgrade."

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