U.K.-based oil and gas exploration and production company Neptune Energy Group Midco Ltd. (Neptune) is a midsize company operating predominantly in the North Sea. The company will face the challenge of moderately declining production due to depletion, but has the means and flexibility to engage in external growth to counteract this natural decline. We consider Neptune's financial policy as conservative, especially for a financial sponsor-owned entity, which supports our anticipation of positive discretionary cash flow in coming years. We are assigning our preliminary 'BB-' long-term issuer credit rating to Neptune. The stable outlook reflects our expectation that Neptune will broadly maintain its production (including some external growth) in the medium term, as well as solid credit metrics through positive discretionary
