Moody’s Investors Service downgraded Fieldwood Energy’s corporate family rating (CFR) to Caa3 from B2, probability of default rating (PDR) to Caa3-PD from B2-PD, senior secured first-lien term loan to Caa1 from Ba2 and senior secured second-lien term loan to Ca from B3.

Moody’s noted that approximately $3 billion of secured term loans are affected.

Moody’s withdrew Fieldwood’s SGL-3 speculative grade liquidity rating. The rating outlook was changed to negative.

“The downgrade reflects Fieldwood’s unsustainable capital structure, weak liquidity and our expectation of continued degradation in leverage and coverage metrics through 2017 as existing hedges roll off,” said Sajjad Alam, Moody’s analyst. “Based on our expectations for low oil and natural gas prices over the next several years, Moody’s believes it is likely that Fieldwood’s debt will need to be restructured.”

Houston, TX-based Fieldwood Energy is a private oil and gas E&P company with primary producing assets on the U.S. Gulf of Mexico shelf.