S&P Downgrades W&T Offshore (WTI) to 'CC'; Outlook Negative

S&P Global Ratings lowered its corporate credit rating on U.S.-based oil and gas exploration and production (E&P) company W&T Offshore Inc. (NYSE: WTI) to 'CC' from 'CCC-'. The outlook is negative.

At the same time, we lowered our issue-level rating on the company's secured debt to 'CC' from 'CCC+'. The recovery rating on this debt is '1', indicating our expectation of very high (90% to 100%) recovery in the event of a payment default. We also affirmed our 'CC' issue-level rating on the company's unsecured debt. The recovery rating is '5', indicating our expectation of modest (10% to 30%, higher half of the range) recovery in the event of a payment default.

"The downgrade follows W&T Offshore's announcement that it began discussions regarding a possible exchange transaction below par involving the company's 8.5% senior unsecured notes due 2019 and 9% second-lien secured notes due 2020," said S&P Global Ratings credit analyst Kevin Kwok. "The company and the noteholders have not yet reached an agreement on the terms of the exchange offer," he added.

The outlook is negative, reflecting the potential that we could lower ratings if the company completes an exchange offer or similar restructuring that we classify as distressed.

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