Among the latest energy companies to be hit with a downgrading by Fitch Ratings are Energy XXI LTD and Energy XXI Gulf Coast, Inc. of Houston, Texas. Both were downgraded this week to ‘C’ following the non-payment of $8.8 million in interest due Feb. 16 on unsecured notes due 2018. The notes were due EPL Oil and Gas, a wholly-owned subsidiary of EGC.
Fitch was blunt about its assessment of the Energy XXI companies, saying EXXI’s capital structure “is unsustainable at our current oil and natural gas price deck and that the potential for debt exchanges or restructuring will be elevated over the next six months.”
The rating company said EXXI had the financial capacity to make the payment but the election to defer the payment indicated that negotiations with creditors could lead to either a “distressed debt exchange or bankruptcy.”
Adding to the increase in concern about the status of the company and its financial stucture is that EXXI has $80 million in interest due March 17 related to the company’s $1.45 billion in second-lien notes.
Adding to the explanation for downgrading the company, Fitch took note of how EXXI’s total proved reserves were down too.
