The 'B+' long-term corporate credit rating on Calgary, Alta.-based MEG Energy Corp. reflects the company's lack of material 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. 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 somewhat mitigate these constraints. MEG's bank loan facilities are rated 'BB' with a recovery rating of '1'. The '1' recovery rating reflects a very high (90%-100%) expectation of recovery in a default scenario. The 'BB'
