S&P lifts Brazos Permian II

S&P said it raised its ratings for Brazos Permian II LLC and its $832 million senior secured term loan to B+ from B. The recovery rating on the company's debt remains 3, which indicates meaningful (50%-70%; rounded estimate: 60%) recovery in default.

“Brazos continued to increase its volumes and demonstrate strong operating performance on robust fundamentals in the Delaware Basin. In 2022, production activity on Brazos' dedicated acreage continued to ramp up, with natural gas gathered volumes increasing by about 8% to 411 million cubic feet per day (MMcf/d), while crude grew by about 20% to 31,000 barrels per day. This positive trend was underpinned by Brazos' system expansion, the acquisition of Pecos Gas Gathering System in 2021, and more wells turned in line during the year,” S&P said in a press release.

The agency said it projects adjusted EBITDA of about $200 million this year, growing to $210 million next year and $235 million in 2024. “Our expected S&P Global Ratings-adjusted debt to EBITDA is 4.3x in 2022, declining to the 3.5x-4x range in 2023 and 2024.”

The outlook is stable.

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