S&P boosts MEG Energy

S&P said it boosted MEG Energy Corp.’s issuer rating to B+ from CCC+ and its second-lien debt and senior unsecured debt to BB and BB-, respectively. The recovery ratings on the second-lien and senior unsecured debt are unchanged at 1 and 2, respectively.

“Having increased our 2021 and 2022 WTI price assumptions to $55 from $45, our projected annual funds from operations (FFO) for MEG Energy has increased by about 70% in 2021, and our updated projected 2022 FFO has doubled relative to our previous forecast (published in November 2020). Moreover, the projected improvement in our fully adjusted FFO-to-debt ratios for 2021 and 2022 is supported by the company's reduced exposure to the Western Canadian Select (WCS) differential,” S&P said in a press release.

However, the agency noted MEG's forecasted profitability remains constrained by the estimate of its total cost structure.

The outlook is stable.

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