Bulletin: MEG Energy Corp.'s Announced Debt Repayment Is Rating Neutral

TORONTO (S&P Global Ratings) July 31, 2019--Calgary, Alta.-based MEG Energy Corp. (B+/Negative/--) announced that it has repaid its term loan outstanding in full. The company also announced it has reduced its credit facility size to C$800 million from US$1.4 billion and extended the maturity to 2024 from 2021. The amended and extended credit facility now includes a net first-lien leverage covenant (of no more than 3.5x EBITDA) if the credit facility draw exceeds C$400 million. S&P Global Ratings believes the debt repayment, along with the reduced near-term capital spending plan, supports credit metrics improvement and provides a cushion against industry weak fundamentals. However, we currently view these developments as credit neutral, because we expect evolving industry fundamentals in Canada and

...July 31, 2019 TORONTO (S&P Global Ratings) July 31, 2019--Calgary, Alta.-based MEG Energy Corp. (B+/Negative/--) announced that it has repaid its term loan outstanding in full. The company also announced it has reduced its credit facility size to C$800 million from US$1.4 billion and extended the maturity to 2024 from 2021. The amended and extended credit facility now includes a net first-lien leverage covenant (of no more than 3.5x EBITDA) if the credit facility draw exceeds C$400 million. S&P Global Ratings believes the debt repayment, along with the reduced near-term capital spending plan, supports credit metrics improvement and provides a cushion against industry weak fundamentals. However, we currently view these developments as credit neutral, because we expect evolving industry fundamentals in Canada and forecast local price differentials will continue to weigh on operating cash flows and sustainability of improved credit metrics. If the immediate improvement in cash flow metrics...

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