Moody’s Investors Service has launched a review of Burlington Resources Inc.’s debt ratings, which it said was prompted by the producer’s success in replacing reserves and increasing production. Burlington’s “trend of operational success” and “strong financial profile,” has been aided by financial discipline and a “buoyant oil and natural gas price environment.”

“Burlington reported record earnings and cash flow from operations for the first half of 2005, reflecting rising production, the benefit of higher commodity prices, and control over costs,” said analysts. “The company’s financial leverage has reached a cyclical low point and its free cash generation is contributing to a strong liquidity position, with cash on the balance sheet of $2.4 billion as of June 30, 2005.”

Moody’s said its rating review will focus on Burlington’s ability to sustain targeted production growth and a strong balance sheet in the near-to-medium term, and on its flexibility to fund a potentially increasing capital program in balance with its shareholder reward initiatives, including stress testing under lower than currently prevailing commodity prices.

The review will also assess the company’s ability to maintain competitive unit full cycle costs in light of industry cost pressures and the maturity of some of its core producing assets. In addition, Moody’s review will factor in acquisition event risk and the degree to which Burlington can absorb large acquisitions without compromising the stronger financial and reserve metrics that characterize the highest rated companies in its independent exploration and production peer group.

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