The ratings on Chaparral Energy Inc. reflect its aggressive growth strategy, high debt leverage, elevated cost structure, and small reserve base. The ratings also incorporate Chaparral Energy's solid reserve life, high operatorship of its properties, extensive hedging program, and the significant ownership by management (over 50%). The senior unsecured notes have been "notched" to reflect the priority debt of the credit facility, secured by a first lien on all oil and gas properties, which encumbers more than 15% of Chaparral Energy's assets under Standard & Poor's Ratings Services' default scenario. As of Sept. 30, 2005, Oklahoma City, Okla.-based Chaparral Energy had roughly $400 million of debt, pro forma the proposed $325 million offering. Chaparral Energy's business profile is considered vulnerable,...
Companies mentioned in this report are:
- Chaparral Energy Inc.
- KCS Energy Inc.
- GE Capital Corp.
- EPL Oil & Gas Inc.
- Whiting Petroleum Corp.
- Clayton Williams Energy Inc.
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