Box Energy Ratings Affirmed and Removed from S&PWatch.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/30/97-- Standard & Poor's Tuesday affirmed its single-'B'-plus corporate credit rating and single-'B'-minus subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". rating of Box Energy Corp. The ratings were removed from CreditWatch, where they were placed May 9, 1997. The affirmations reflect expectations that there will be no significant changes in Box Energy's strategy, following the recent change in ownership. An investment vehicle of J.R. Simplot now owns an 89.6% interest in Box Brothers Holding Co., which holds 57% of Box Energy Corp.'s Class A voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. . Financial support from the Simplot group is not assumed in the ratings. The ratings on Box Energy Corp. reflect its position as a small oil and gas exploration and production company (9.9 million boe, 67% gas, 100% U.S.) with limited reserve and geographic diversity, aggressive leverage relative to the size of the company, and higher-than-average finding costs. Box's assets are concentrated in the Gulf of Mexico's prolific South Pass (SP) region and neighboring neigh·bor n. 1. One who lives near or next to another. 2. A person, place, or thing adjacent to or located near another. 3. A fellow human. 4. Used as a form of familiar address. v. West Delta. Over the next few years, significant increases in output from SP platforms are expected to continue. The resulting improvement in cash flow generation should allow the company to continue to internally fund its expanding exploration program in new high potential core areas. Natural gas pricing risk is materially reduced, as a significant portion of production is subject to an above market price take-or-pay contract. Despite maintenance of a significant portfolio of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , financial flexibility is still limited as debt levels are expected to remain high relative to total reserves. Yet, as a result of the company's favorable price realizations, cash flow measures should remain healthy, with funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to total debt in the 50% range and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. ) interest coverage of about 6.0 times. OUTLOOK: STABLE Anticipated reserve base diversification and stronger cash flow, which likely will result over time from increased drilling activity, are offset by the relatively small scope of Box's operations and limited expectations of material improvements in the near term. -- CreditWire CONTACT: Joy Magtoto, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , 212/208-1808 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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