The 'B+' long-term corporate credit rating on Calgary, Alta.-based MEG Energy Corp. reflects the company's lack of internal cash flow generation, as it is in the construction phase of its Christina Lake oil sands project; its high leverage; the risk of cost increases on construction of its project; and its exposure to heavy oil differentials once production begins. Somewhat mitigating these constraints are the above-average reserve life index (RLI) of MEG's oil sands leases, and the expected stable production profile with negligible finding costs associated with oil sands extraction. MEG's bank loan facilities, which are composed of a seven-year, US$700 million secured term loan B and a three-year, US$50 million secured revolving credit facility, are rated 'BB' with a recovery
