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SAGD wellpad in northern Alberta. Image: Joey Podlubny/JWN CALGARY — Big Canadian oil and gas companies face downgrades in their credit scores if current steep price discounts for their products continue, warns credit rating agency DBRS Ltd. in a report released Wednesday. Such rating cuts could affect the companies’ ability to access credit to fund future growth and potentially increase what they pay to service their debt. “Currently the differential is very high on heavy, it’s very high on light, it’s very high on synthetic, so that’s putting a lot of pressure on cash flows and, obviously, credit metrics as a result,” said Victor Vallance, senior vice-president of energy, global corporates, for DBRS. “It’s very unusual. I’ve never seen…this disconnect between Canada and the rest of the world, unfortunately, because of the increase in supply and not sufficient enough expansion of takeaway capacity.” DBRS last issued a similar warning in early 2016 after New York-traded West Texas Intermediate prices crashed to below US$30 per barrel, he said, but a price recovery allowed most firms to escape being downgraded. The recent drop in London-traded Brent and WTI oil prices makes the current problem even more acute for Calgary-based oil and […]
