S&P downgrades Penn Virginia

Standard & Poor's lowered its corporate credit rating on Penn Virginia Corp. to CCC from B-. The outlook is negative.

At the same time, S&P lowered its issue-level ratings on the company's senior unsecured debt to CC from CCC. The recovery rating on the debt remains 6, which indicates the agency’s expectation for negligible (0% to 10%) recovery in the event of a default.

“The downgrade reflects our assessment of the company’s deteriorating liquidity as weak crude oil and natural gas prices continue to depress operating cash flows,” said S&P credit analyst David Lagasse, in a news release.

“We have revised our liquidity assessment to weak from adequate, indicating our estimate of a material liquidity deficit over the next 12 months, unless PVA is able to raise equity or execute asset sales,” he added.

The company expects to outspend cash flows in the fourth quarter of 2015 by about $15 million to $30 million. Additionally, S&P expects Penn Virginia to outspend cash flows in 2016.

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