Approximately $2.75 billion of debt affected
Toronto, April 02, 2012 -- Moody's Investors Service placed the ratings for MEG Energy Corp.
(MEG) under review for possible upgrade. The ratings under review
are the B1 Corporate Family Rating (CFR), B1 Probability of Default
Rating (PDR), Ba3 (LGD3,34%) senior secured revolver
and term loan, and B3 (LGD5,87%) senior unsecured notes
rating.
RATINGS RATIONALE
The review is prompted by MEG's 100% concentration in oil,
improving operating cash flow and leverage metrics, advancement
of Phase 2B, very good liquidity and ownership of high quality bitumen
reserves and resources.
The ratings review is expected to be concluded over the next three months.
Any change in ratings will likely be limited to one notch.
On Review for Possible Upgrade:
..Issuer: MEG Energy Corp.
.... Probability of Default Rating,
Placed on Review for Possible Upgrade, currently B1
.... Corporate Family Rating, Placed
on Review for Possible Upgrade, currently B1
....Senior Secured Bank Credit Facility,
Placed on Review for Possible Upgrade, currently Ba3
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Possible Upgrade, currently B3
Outlook Actions:
..Issuer: MEG Energy Corp.
....Outlook, Changed To Rating Under
Review From Stable
Withdrawals:
..Issuer: MEG Energy Corp.
....Senior Secured Bank Credit Facility,
Withdrawn, previously rated Ba3, LGD3, 34%
The principal methodology used in rating MEG Energy was the Global Independent
Exploration and Production Industry Methodology published in December
2011. Other methodologies used include 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.
MEG is a Calgary, Alberta based publicly-held oil sands operating
and project development company.
REGULATORY DISCLOSURES
Although this credit rating has been issued in a non-EU country
which has not been recognized as endorsable at this date, this credit
rating is deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 30 April
2012. Further information on the EU endorsement status and on the
Moody's office that has issued a particular Credit Rating is available
on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not
an auditor and cannot in every instance independently verify or validate
information received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is
the most reliable and accurate based on the information that is available
to it. Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Terry Marshall
Senior Vice President
Corporate Finance Group
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
(416) 214-1635
Donald S. Carter, CFA
MD - Corporate Finance
Corporate Finance Group
(416) 214-1635
Releasing Office:
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
(416) 214-1635
Moody's reviews MEG Energy's ratings for upgrade