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Issuer Ranking: Canadian Oil And Gas Companies, Strongest To Weakest, By Sector

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Issuer Ranking: Canadian Oil And Gas Companies, Strongest To Weakest, By Sector

Industry Fundamentals Underpin Negative Rating Bias In 2019

Canadian oil and gas rated companies' credit quality remained under pressure in 2019, as persistent hydrocarbon price weakness, and slowing industry activity, contributed to 15 negative rating actions and seven rating withdrawals during the year. Year-over-year, the number of rated Canadian oil and gas companies decreased about 20%, primarily due to weakening credit quality, debt restructuring, and mergers and acquisitions. As capital markets remained largely closed to speculative-grade rated oil and gas companies, some 'B' category rated exploration and production, and oilfield services (OFS) companies were unable to refinance maturing debt. Capital market access was particularly constrained for small, regionally focused natural gas producers and niche OFS companies. As a result, downgrades and withdrawals were largely concentrated among these two groups. Constrained capital market access resulted in about 30% of rated Canadian oil and gas industry companies exiting public debt markets, since the beginning of 2018. Our current U.S. and Canadian oil and gas published price assumptions indicate our expectation of continued industry weakness during our 2020-2022 forecast period. As a result, we expect credit quality weakness, particularly for 'B' and 'CCC' category rated companies, will persist during this period.

Tables 1 to 4 list the current ranking of Canadian oil and gas companies. We rank companies in each of the three industry sectors from strongest to weakest, based on our assessment of each company's business and financial risk profiles, and liquidity.

Table 1

Canadian Oil And Gas Companies -- Strongest To Weakest
Company Long-term issuer credit rating Outlook Business risk profile Financial risk profile Liquidity
Integrated

Suncor Energy Inc.

A- Stable Strong Intermediate Strong

Imperial Oil Ltd.*

AA+ Negative Strong Intermediate Strong

Husky Energy Inc.

BBB Stable Satisfactory Significant Strong
Exploration and Production

Canadian Natural Resources Ltd.

BBB+ Stable Strong Intermediate Strong

Cenovus Energy Inc.

BBB Stable Strong Significant Strong

Encana Corp.

BBB Stable Strong Significant Strong

Seven Generations Energy Ltd.

BB Stable Fair Intermediate Strong

Baytex Energy Corp.

BB Stable Fair Significant Strong

Vermilion Energy Inc.

BB- Stable Weak Significant Strong

MEG Energy Corp.

B+ Negative Fair Highly Leveraged Strong

Paramount Resources Ltd.

B+ Negative Weak Aggressive Adequate

Teine Energy Ltd.

B Stable Weak Aggressive Adequate

NuVista Energy Ltd.

B Stable Vulnerable Significant Adequate

Crew Energy Inc.

B- Stable Vulnerable Highly Leveraged Less than adequate

Vesta Energy Corp.

B- Negative Vulnerable Aggressive Adequate

Athabasca Oil Corp.

CCC+ Stable Vulnerable Highly Leveraged Adequate

Osum Production Corp.

CCC+ Stable Vulnerable Highly Leveraged Adequate
Oil Field Services & Drillers

Precision Drilling Corp.

BB- Stable Fair Aggressive Strong

Ensign Drilling Inc.

BB- Stable Fair Aggressive Adequate

Teekay Corp.

B+ Stable Fair Highly Leveraged Adequate

Tervita Corp.

B+ Stable Weak Aggressive Adequate

North American Construction Group Ltd.

B Positive Vulnerable Significant Adequate

CES Energy Solutions Corp.

B Stable Vulnerable Aggressive Adequate

Calfrac Well Services Ltd.

B- Stable Weak Highly Leveraged Adequate

Source Energy Services Ltd.

CCC Negative Vulnerable Aggressive Weak
Note: In instances where two or more companies have identical scores, those companies are listed in alphabetical order. *We base Imperial's ranking on the company's stand-alone credit profile.

Table 2

Canadian Oil And Gas Integrated Companies--Strongest To Weakest
Company Issuer credit rating Outlook Business risk profile Financial risk profile Liquidity
Suncor Energy Inc. A- Stable Strong Intermediate Strong
Imperial Oil Ltd.* AA+ Negative Strong Intermediate Strong
Husky Energy Inc. BBB Stable Satisfactory Significant Strong
*We base Imperial's ranking on the company's stand-alone credit profile.

Table 3

Canadian Oil And Gas Exploration And Production Companies--Strongest To Weakest
Company Issuer credit rating Outlook Business risk profile Financial risk profile Liquidity
Canadian Natural Resources Ltd. BBB+ Stable Strong Intermediate Strong
Cenovus Energy Inc. BBB Stable Strong Significant Strong
Encana Corp. BBB Stable Strong Significant Strong
Seven Generations Energy Ltd. BB Stable Fair Intermediate Strong
Baytex Energy Corp. BB Stable Fair Significant Strong
Vermilion Energy Inc. BB- Stable Weak Significant Strong
MEG Energy Corp. B+ Negative Fair Highly Leveraged Strong
Paramount Resources Ltd. B+ Negative Weak Aggressive Adequate
Teine Energy Ltd. B Stable Weak Aggressive Adequate
NuVista Energy Ltd. B Stable Vulnerable Significant Adequate
Crew Energy Inc. B- Stable Vulnerable Highly Leveraged Less than adequate
Vesta Energy Corp. B- Negative Vulnerable Aggressive Adequate
Athabasca Oil Corp. CCC+ Stable Vulnerable Highly Leveraged Adequate
Osum Production Corp. CCC+ Stable Vulnerable Highly Leveraged Adequate

Table 4

Canadian Oil And Gas Oilfield Services And Contract Drillers--Strongest To Weakest
Company Issuer credit rating Outlook Business risk profile Financial risk profile Liquidity
Precision Drilling Corp. BB- Stable Fair Aggressive Strong
Ensign Drilling Inc. BB- Stable Fair Aggressive Adequate
Teekay Corp. B+ Stable Fair Highly Leveraged Adequate
Tervita Corp. B+ Stable Weak Aggressive Adequate
North American Construction Group Ltd. B Positive Vulnerable Significant Adequate
CES Energy Solutions Corp. B Stable Vulnerable Aggressive Adequate
Calfrac Well Services Ltd. B- Stable Weak Highly Leveraged Adequate
Source Energy Services Ltd. CCC Negative Vulnerable Aggressive Weak

Related Research

  • S&P Global Ratings Report Announces Lower U.S. Natural Gas Price Assumptions For 2020-2022, Dec. 6, 2019
  • For Canada, Below-Potential Growth Is Likely In The Near Term, Oct. 7, 2019
  • S&P Global Ratings Lowered Its Henry Hub Natural Gas Price Assumptions For The Rest Of 2019, And For 2020, 2021; Long-Term U.S. Natural Gas, Canadian AECO, And Crude Oil Price Assumptions Unchanged, July 29, 2019
  • S&P Global Ratings Expands Its Published Price Assumptions To Include Canadian AECO Benchmark Gas Price, Feb. 7, 2019
  • S&P Global Ratings Lowers Its Western Canadian Select Price Assumptions To Reflect Continued Volatility In Differentials, Feb. 7, 2019

This report does not constitute a rating action.

Primary Credit Analyst:Michelle S Dathorne, Toronto (1) 416-507-2563;
michelle.dathorne@spglobal.com
Research Assistant:Tanmay P Kumbharkar, Mumbai

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