S&P trims M6 ETX

S&P said it lowered its ratings for M6 ETX Holdings II MidCo LLC and its term loan to B from B+. The loan’s 3 recovery rating, indicating meaningful (50%-70%; rounded estimate: 65%) recovery in default is unchanged.

“Continued drilling delays and low natural gas prices have hurt M6 ETX's EBITDA. M6 ETX faced persistent challenges with drilling and well completion delays on its dedicated acreage throughout 2023. The company's third-quarter annualized EBITDA was reported at $120 million, falling $10 million short of our projections for the year. These delays are primarily due to historically low natural gas prices, which have led exploration and production (E&P) companies in the Haynesville basin to scale back their operations,” S&P said in a press release.

The agency added it expects weaker credit metrics for 2023 and 2024. S&P revised its EBITDA estimates to $120 million for 2023 and $130 million for 2024. “Consequently, we project leverage to reach approximately 6x in 2023, with an improvement to 5.5x in 2024.”

The outlook is stable.

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