Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

CORRECTION TO TEXT: MOODY'S ASSIGNS B2 TO WILLIAMS RMT'S FIRST SECURED TERM LOAN B

16 May 2003
CORRECTION TO TEXT: MOODY'S ASSIGNS B2 TO WILLIAMS RMT'S FIRST SECURED TERM LOAN B
Moody’s rated Williams Production RMT Company's (RMT) $400 million senior first secured debt and confirmed its senior unsecured notes. Generally, this reflects: high leverage, and potentially higher leverage, on reserves; small proven developed reserve base; major capital needs to develop proven non-producing reserves; discounted Rocky Mountain natural gas prices; and that all RMT hedges are with Williams' trading subsidiary. This is tempered by a lower risk reserve replacement profile, strong operating management, and its long successful experience with its Rocky Mountain property base. RMT is an operating company indirectly wholly owned by The Williams Companies (B3 senior implied and Caa1 senior unsecured).
With a stable rating outlook, Moody's:
i) Assigned a B2 rating to RMT's proposed $400 million first secured Term Loan B maturing May 2007.
ii) Assigned a B3 senior implied rating to RMT.
iii) Confirmed a Caa1 rating for RMT's $150 million of 7.55% senior unsecured notes.
Ratings restraints: relatively small proven developed producing (PDP) and proven developed (PD) reserves; high leverage on PD and PDP reserves and below average PD reserve life; reliance on the trading subsidiary of highly leveraged Williams for all of RMT's natural gas hedges; concentration of 82% reserves and 57% of production in one geologic setting (Piceance Basin); the heavy $915 million of future capital needed simply to bring RMT's outsized mix of proven undeveloped (PUD) and proven developed non-producing (PDNP) reserves to production; the inherent potential for environmental groups to continue to attempt to slow the pace of Rocky Mountains drilling (in spite of the BLM's recent favorable ruling); and the fact that parent Williams currently carries extremely high leverage and faces numerous challenges to resolve prior to being viewed as additive to RMT's ratings.
The ratings are supported by sound reserve replacement economics (though based on the limited information available to assess RMT's three year average finding and development costs); historically relatively lower reserve replacement risk and adequate natural gas gathering and processing infrastructure; the extensive experience in the region provided by RMT's operating management; firm pipeline transportation to move almost two thirds of RMT's production away from Rocky Mountain pricing, which is historically discounted from the Henry Hub benchmark, to the Mid-continent and San Juan Basin regions (San Juan discount is not as severe as Rocky Mountains); and an extensive inventory of comparatively low risk PUD and probable drilling locations involving multiple pay zones. Firm pipeline transportation will rise towards 90% of production by 2006.
Moody's believes there is a good possibility of material reserve additions from approved down spacing on a portion of RMT's Piceance Basin properties. Moody's cautions that such reserves would entirely be comprised of PUD reserves requiring substantial drilling and development capital.
RMT holds a property base of considerable quality. However, proposed combined debt and necessary development capital represent high leverage on total proven reserves in a region that also has faced periodic regulatory and environmental impediments to achieving the sector's desired pace of drilling and development, and that produces into discounted prices due to chronic oversupply in the region and distance from major natural gas consuming markets. Furthermore, RMT's year-end 2002 PV10 net present value of reserves incorporates historically up-cycle natural gas prices. Moody's also projects that longer-term reserve replacement costs may be in the range of $0.60/mcfe to $0.75/mcfe. Additionally, a bit over one-third of RMT's production is sold directly into discounted Rocky Mountain prices with the remainder escaping that discount by having firm transportation out of the gas-long Rocky Mountain region and into major pipeline transportation hubs.
The B2 Term Loan B rating would be supported by a perfected first mortgage on substantially all of RMT's reserves. The Caa1 rating on the 7.55% senior unsecured notes reflects their material effective subordination to, at least, $400 million of proposed senior secured debt.
In light of the parent's ongoing cash needs, and in order for RMT to be viewed as a standalone exploration and production credit with upward rating momentum, it would be desirable that Term Loan B covenants enable the maximum amount of RMT cash flow to be dedicated to reinvestment in RMT reserve development and replacement and/or debt reduction, rather than be available for dividends. Covenants would need to ensure that ample cash flow be reinvested to (1) develop, complete, and produce existing PDNP and PUD reserves and (2) provide ample internal capital to ensure a reasonable possibility of continuing to replace reserves during the life of Term Loan B.
Regarding RMT's Piceance Basin properties, the firm has been working these properties since its Parachute Creek discovery well in 1984. The Piceance is a 1,700 foot to 2,400 foot thick gas bearing horizon. While the horizon is predominantly characterized by low porosity and low permeability rock, embedded within it are very high numbers of layered tight lenticular sandstone reservoirs. Drilling targets multiple pay sand lenses at roughly 6,000 feet and 7,500 feet. Statistically, completion rates are quite high. The volumetric half-life of RMT's Piceance proven developed producing reserves is roughly 6 years.
Regarding RMT's coalbed methane reserves in the Powder River Basin, these properties are comparatively price and unit cost sensitive. Drilling, development and production have so far been concentrated in the Wyodak coals. Since 2001, RMT's capital and activity has begun to migrate from the Wyodak to the exploitation of the geologically deeper Big George coals, which are now beginning to produce for RMT. The Wyodak is increasing a mature play. In Moody's view, it is too early in the Big George's development to assign significant ratings value to the ultimate scale and economic contribution of the Big George properties. Furthermore, it is Moody's view that the production volumetric half-life of WRMT's existing proven reserves is a low 2.8 years.
Term Loan B's use of proceeds will be to repay a like proportion of RMT's existing $1.016 billion secured term loan. Additional funds from the parent, Williams, will repay the then remaining amount of the existing secured term loan, the $85 million of PIK interest expense, and transaction fees and expenses.
Pro-forma for a $400 million Term Loan B, RMT's capital structure would include the Term Loan B, $150 million of 7.55% senior unsecured notes due 2007, and $13 million of other secured debt which RMT expects to pay off shortly. In addition, a now $52 million preferred interest in a subsidiary is effectively senior unsecured debt structurally senior to Term Loan B. However, RMT believes that the $52 million will be paid off imminently. Lastly, proceeds from pending asset sales are expect to be loaned to the parent Williams which will also be advancing funds to repay part of the existing secured debt.
RMT's pro-forma proven developed (PD) reserves total a comparatively small 112.1 mmboe (672.6 mcfe) of reserves. PUD reserves represent a high 60% to total proven reserves, which total 279.1 mmboe (1.675 bcfe). PD reserves have a below average reserve life of 6.5 years on 2002 pro-forma production.
RMT would carry a substantial debt burden on reserves requiring an additional $915 million of capital, plus attendant drilling, completion, and decline curve risk, to produce. At $400 million of Term Loan B, total leverage on PD reserves is high at $5.02/boe of PD reserves ($3.57/boe of first secured debt only). At a $500 million Term Loan B, total leverage on PD reserves is high at $5.68/boe (a $4.47/boe of first secured debt only).
At $400 million of Term Loan B, total debt plus the required $915 million of development capital would be a high $5.30/boe of total reserves ($4.71/boe including only first secured debt and development capital). At $500 million of Term Loan B, these numbers are high at $5.01/boe and $4.52/boe, respectively.
RMT's ability to realize under its natural gas price hedges with its affiliate are important to generating adequate coverage of and returns on reserve replacement. High benchmark natural gas prices can weaken and Rocky Mountain price realizations can be severely discounted from benchmark prices, though this may be moderating with this month's opening of the Kern River Pipeline expansion. Based on the limited amount of historic financial data available solely for the pro-forma RMT operating entity and for the components of its last three years of reserve replacement cost history relating solely to the pro-forma reserve base, Moody's roughly estimates RMT's total full-cycle costs to be in the $13/boe ($2.17/mcfe) range, including pro-forma unit production, G&A, interest, and finding and development costs. However, this could change with experience.
Williams Production RMT is headquartered in Tulsa, Oklahoma.
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com