S&P: MidContinent on watch

Standard & Poor's said it placed MidContinent Express Pipeline LLC’s BBB- issuer credit rating and BBB- rating on its senior unsecured notes on CreditWatch with negative implications.

The negative watch placement reflects the potential consequences of MidContinent's dependence on Chesapeake Energy Corp., S&P said.

This issuer has long been regarded as having considerable counterparty risk, the agency said, but this concern recently increased as Chesapeake's financial position has weakened.

About 40% of the MidContinent’s volumes are contracted with Chesapeake, S&P explained.

While S&P said it recognizes there would be incentives to continue to utilize the MidContinent pipeline to bring produce to market, the utilization rates and fee structures will now have greater uncertainty, particularly given low natural gas prices.

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