OREANDA-NEWS. Fitch Ratings has downgraded Pacific Exploration and Production Corp's (Pacific) Foreign and Local Currency Long-term Issuer Default Ratings (IDRs) to restricted default 'RD' from 'C'. Concurrently, Fitch has affirmed the 'C/RR4' long-term rating on Pacific's outstanding senior unsecured debt issuances totaling approximately USD4 billion with final maturities in 2019 through and 2025.

KEY RATING DRIVERS

The rating downgrade to 'RD' is a result of the company's announcement on March 24th of an extension of a previous forbearance agreement to April 29, 2016 from March 31, 2016. Fitch considers the extension of multiple waivers or forbearance periods upon a payment default a restricted default given they represent a material reduction in terms compared with the original contractual terms.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for Pacific include West Texas Intermediate (WTI) average oil prices for 2016, 2017 and 2018 of $35/bbl, $45/bbl and $55/bbl, respectively, and $65/bbl in the long-term. Fitch expects the company's production to decline to approximately 100 thousand barrels of oil equivalent per day (mboe/d) to 110 mmboe/d in the second half of 2016 and going forward.

RATING SENSITIVITIES

The company's ratings could be revised to 'D' from 'RD' pursuant to Fitch's rating definition. An upgrade is unlikely at this time.

LIQUIDITY

Weak Liquidity Position: The company's liquidity position versus debt amortizations as of Dec. 31, 2015 was weak, with Pacific reporting $343 million of cash on hand and $5,377 million of debt. The company's debt amortization schedule is spread between 2017 and 2025 with an average of $1 billion coming due every two years. The company's liquidity could improve if the company succeeds at selling some none-core assets and if global oil prices rebound significantly from current levels.

FULL LIST OF RATING ACTIONS
Fitch has taken the following ratings actions:

Pacific Exploration and Production Corp.
--Foreign and local currency IDRs downgraded to 'RD' from 'C';
--International senior unsecured bonds ratings affirmed at 'C/RR4'.