Fitch lowers Pacific Exploration

Fitch Ratings said it downgraded Pacific Exploration and Production Corp.’s foreign- and local- long-term issuer default ratings to C from CCC.

Fitch also said it downgraded the long-term rating on the company’s outstanding senior unsecured debt issuances of about $4 billion due in 2019 through 2025 to C with recovery rating of RR4 from CCC with recovery rating of RR4.

The downgrade reflects news that the company has elected to not make its scheduled interest payments on its 5 5/8% notes due Jan. 19, 2025 and its 5 3/8% notes due Jan. 26, 2019.

The company intends to utilize its 30-day grace period pursuant to the indentures governing its respective notes, the agency said.

Should the company not make interest payments following the 30-day grace period, Fitch said it will downgrade the company's issuer default rating to RD, or restricted default.

The rating action is consistent with expectations that the company's capital structure would weaken to an unsustainable level over the near term as a result of the current decline of global oil prices, the agency said.

The ratings also incorporate the company's delay in the sale of assets to bolster liquidity, Fitch said, as well as delays in reaching an agreement with the company's syndicate of lenders under its $1 billion revolving credit facility and other bank loans.

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