Karoon Energy (ASX:KAR) said that Fitch Ratings has affirmed its long-term issuer default rating at "B" while revising the outlook to negative from stable, according to a Monday filing with the Australian bourse.

Fitch also reaffirmed the company's $350 million senior secured notes at a "B+" rating, per the filing.

The rating reflects the company's low-cost production base, strong liquidity, and absence of near-term debt maturities, but is offset by operational disruptions at key assets and an expected natural decline in production, the filing said.

Fitch expects the company to sustain moderate leverage and generate positive free cash flow to meet its obligations, while the negative outlook reflects concerns about production sustainability and the timing of project execution, the filing added.

Karoon Energy's shares were down 4% in recent Monday trade.