Santa Fe Energy Resources' Outlook Revised By S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/18/98-- Standard & Poor's today revised its outlook on Santa Fe Santa Fe, city, Argentina Santa Fe, city (1991 pop. 341,000), capital of Santa Fe prov., NE Argentina, a river port near the Paraná, with which it is connected by canal. Energy Resources Inc. to stable from positive. The company's double-'B'-plus corporate credit and bank loan ratings and double-'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 were affirmed. The outlook revision reflects concerns about the rising usage of debt to finance capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and acquisitions at the same time that continuing low oil prices have reduced revenue and cash flow. The result has been a rapid increase in debt leverage and reductions in interest and cash flow coverages. Santa Fe began the year with very low debt, providing substantial debt capacity within the rating, so Standard & Poor's view of the firm's credit quality is unchanged. However, the likelihood of an upgrade has been reduced. Santa Fe is an independent oil and gas exploration and production company. Producing properties are located onshore U.S., Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east , Argentina, and Indonesia. Exploration is focused on the Gulf of Mexico, Argentina, China, Columbia, Cote d'Ivorie, Equador, Gabon, Ghana, Indonesia, and Malaysia. At year-end 1997, Santa Fe had a mid-sized reserve base of 171 million boe (75% oil, 83% proved developed) and a somewhat short reserve life of eight years. The company no longer benefits from the relatively stable cash flow generated by heavy oil properties in California that were spun off in 1997, but the company's business position is buttressed but·tress n. 1. A structure, usually brick or stone, built against a wall for support or reinforcement. 2. Something resembling a buttress, as: a. The flared base of certain tree trunks. b. by several other factors. These factors include a solid track record of replacing reserves through drilling and a better than average cost position, which supports above-average margins. Over the next few years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time company is expected to supplement its large inventory of relatively low-risk domestic drilling opportunities in the Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. and Gulf of Mexico continental shelf with higher-potential, higher-risk exploration in the Gulf of Mexico flex trend and internationally. OUTLOOK: STABLE Upside rating potential is limited by drilling and acquisition spending well in excess of internal cash flow, which in turn has raised borrowing levels. While financial flexibility remains adequate, elevated debt usage is anticipated for the near term given the continuing period of low oil prices. -- CreditWire |
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