New York, June 14, 2012 -- Moody's Investors Service confirmed Alta Mesa Holdings, LP's (Alta Mesa) B2 Corporate Family Rating (CFR) and B3 senior unsecured note rating. Moody's also assigned a SGL-3 Speculative Grade Liquidity rating reflecting adequate liquidity through mid-2013. The outlook is stable. This action concludes Moody's rating review, which commenced on April 2, 2012.

Issuer: ALTA MESA HOLDINGS, LP

..Confirmations:

.... Probability of Default Rating, Confirmed at B2

.... Corporate Family Rating, Confirmed at B2

....US$300M 9.625% Senior Unsecured Regular Bond/Debenture, Confirmed at B3

..Assignments:

.... Speculative Grade Liquidity Rating, Assigned SGL-3

..Outlook Actions:

....Outlook, Changed To Stable From Rating Under Review

RATINGS RATIONALE

"High oil prices, technological advances to onshore drilling and completion methods and Alta Mesa's focused development efforts in the oil and liquids-rich Weeks Island, Eagle Ford and Oklahoma regions are expected to improve the company's margins and cash flows through 2014," commented Sajjad Alam, Moody's analyst. "However, in achieving higher oil and overall production volumes, Alta Mesa will have to spend significant amounts of capital, develop new areas and execute a successful drilling campaign through 2013."

Low natural gas prices will continue to inhibit Alta Mesa's overall production volume. While the company's relatively low-risk oil projects may ultimately offset the declines in natural gas volumes, the transition from gas to oil will be gradual. The company's progression to a higher rating category would depend on its ability to substantially reach its oil growth targets and establishes a more sustainable production base.

The B2 CFR reflects Alta Mesa's small scale, high leverage, exposure to natural gas prices and execution risks associated with its liquids growth strategy. The rating is supported by its modestly diversified portfolio of developed properties with low geological risks and favorable finding and development (F&D) costs, its substantially hedged position, as well as by its significant growth prospects in liquids production in 2012 and beyond. The rating is negatively impacted by the limited partnership structure which provides Denham with a liquidity demand right that became effective in January 2012. A demand for liquidity would at a minimum distract management's focus, and could be provided through a recapitalization, an IPO, or liquidation of the partnership.

Alta Mesa plans to spend between $220 million and $240 million in 2012, mostly on oily assets. The core conventional South Louisiana assets will attract the most capital (currently produces ~33% oil), followed by the Eagle Ford, (~91% oil) and Oklahoma (~56% oil). Total expenditures at the Hilltop (formerly Deep Bossier) will be much smaller than historical levels and will target shallower oil zones (Austin Chalk and Woodbine formations) compared to the more gassy production that has been typical of the region. Alta Mesa is looking to exit 2012 with oil comprising over 40% of total production, up from roughly 22% in 2010. While natural gas will remain a substantial component of overall production, the company's substantial above-market price hedges should shelter margins through 2013.

Liquidity should be adequate through mid-2013, which is captured in the assigned SGL-3 rating. Alta Mesa's funds from operations, cash balance and revolver availability should sufficiently cover capital expenditures and working capital requirements through mid-2013. At March 31, 2012, the company had approximately $9 million of cash and as of May 15, 2012 had $118 million of availability on its $350 million borrowing base revolving credit facility. The borrowing base was re-determined in May 2012. The facility expires on May 23, 2016. The revolving credit facility has three financial covenants - a maximum debt to EBITDAX of 4.0x, a minimum EBITDAX to interest of 3.0x, and a minimum current ratio of 1.0x. There is ample headroom under the covenants and we expect full compliance through 2013. Substantially all of the partnership's assets are pledged as collateral for the revolving credit facility. As such, Alta Mesa's ability to raise alternate liquidity is limited.

The stable outlook reflects the repeatability of Alta Mesa's asset base, its substantially hedged future sales, and our expectation that the near-term growth in oil and NGL production will be funded principally with operating cash flow.

An upgrade would be considered if Alta Mesa can raise production above 20,000 boe per day through drilling success, lower debt to average daily production below $25,000 per boe and achieve a leveraged full-cycle ratio approaching 1.5x.

Alta Mesa's ratings could be downgraded if it assumes significant amount of debt to fund growth, acquisitions or distributions resulting in a debt to average daily production above $35,000 per boe.

The principal methodologies used in rating Alta Mesa were the Independent Exploration and Production Industry methodology published in December 2011, and the Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Alta Mesa Holdings, headquartered in Houston, Texas, is an independent E&P company with primary producing properties located South Louisiana, East Texas, Oklahoma, and the Eagle Ford Shale in South Texas.

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Sajjad Alam Analyst Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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