NEW YORK (AP) -- Moody's Investors Service downgraded its credit rating on Forest Oil Corp. on Thursday, saying the company's credit measurements are still weak even though it has paid back some of its debt.
Moody's lowered its rating to "B2" from "B1" and maintained a negative outlook, meaning further downgrades are possible. Both ratings are non-investment grade, and the new rating is five notches into "junk" status.
Forest Oil has sold off some of its assets to reduce debt, and Moody's said the company has reduced its debt by about $460 million since 2012's third quarter. However, it said the sales have further reduced the company's production and reserves, which will make it hard for the company to keep reducing its leverage.
"While asset sales were initially directed at non-core, non-producing properties, the sale of certain producing properties served to continue Forest's four-year downward trajectory in proved reserves and average daily production," said analyst Andrew Brooks. He added that the company is still being hurt by low price for natural gas.
The ratings apply to about $1.5 billion in debt.
Shares of Forest Oil were down 8 cents to $4.68 in afternoon trading.