S&P Downgrades Six Canadian Energy Issuers on Decline in Oil

Updated on
  • Cenovus's debt ratings lowered, Husky's outlook lowered
  • Harvest, Jupiter, Lightstream, Bellatrix also affected

Cenovus Energy Inc. and Husky Energy Inc. and four other Canadian energy companies have seen their ratings or outlooks lowered by Standard & Poor’s as slumping commodities prices put pressure on their businesses.

Cenovus’s grade was cut to two levels above junk to BBB from BBB+ with a stable outlook and Husky saw the outlook on its BBB+ ranking lowered to negative from stable, the rater announced Friday.

"The rating actions taken on both Cenovus and Husky reflect our view of the changes to each company’s business risk and financial risk profiles caused by the persistent weakness of crude oil and natural gas prices, and the resulting downward revision of our hydrocarbon price assumptions," S&P said in its ratings rationale.

Cenovus spokesman Brett Harris said in an e-mail that "nothing has changed" for Cenovus despite the credit rating downgrade.

"We are still a solid investment-grade company with one of the best balance sheets in our industry and top-tier assets," Harris said.

Four speculative-grade explorers and producers were also affected. Harvest Operations Corp. saw its rating cut to CCC+ from B with a negative outlook. Jupiter Resources Inc. was lowered to B from B+ with a negative outlook. The outlook for Lightstream Resources Ltd. was reduced to negative from stable. Bellatrix Exploration Ltd. was cut to B from B+ with a stable outlook.

Husky, Harvest, Jupiter, Lightstream and Bellatrix didn’t respond to calls and e-mails requesting comment.

S&P announced in September that it was reviewing the credit ratings of all Canadian oil and gas explorers and producers as it revises its oil price estimates following the rout that has seen the price of West Texas Intermediate plunge about 55 percent from June 2014 highs. The rating company lowered its 2015 crude price estimate to $45 from $50 a barrel and its 2016 forecast to $50 from $60 a barrel in September. It also revised the 2017 estimate to $60 from $70.