S&P Downgrades Warren Resources (WRES) to 'D' Amid Missed Interest Payment

Standard & Poor's Ratings Services lowered its corporate credit on oil and gas exploration and production company Warren Resources Inc. (Nasdaq: WRES) to 'D' from 'SD' (selective default). The issue-level rating on the company's unsecured debt remains 'D'. The recovery rating remains '6', indicating our expectation of negligible (0%-10%) recovery in the event of a payment default.

The 'D' ratings reflect Warren Resources Inc.'s announcement that it has missed a $7.5 million interest payment on its outstanding $300 million 9% notes ($167 million outstanding) due 2022, and our belief that the company will not make this payment before the 30-day grace period ends. We believe that the default will be a general default and the company will fail to pay all or substantially all of its obligations as they come due.

The company has also disclosed that it is engaged in ongoing negotiations with the holders of its outstanding unsecured notes regarding a potential restructuring, along with possible avenues for increasing its near-term liquidity.

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