Moody's cuts MEG Energy

Moody's Investors Service said it downgraded MEG Energy Corp.'s corporate family rating to B1 from Ba3 and downgraded its senior first secured debt ratings to B1 from Ba3.

The outlook is negative, but it will be considered for a move to stable when MEG completes the arrangement of a new bank revolver of up to $150 million and $500 million of equity.

The downgrades reflect substantially reduced expected bitumen price realizations and the uncertain margin impact due to the extended period of time before MEG's full commercial scale SAGD operations will be up and running and steam-oil ratios and other cost and economic relationships can be observed, the agency said.

Ratings are supported by MEG's 100% ownership of a world class large base of long-lived bitumen reserves and indicated favorable unit costs at its phase I pilot project, Moody's said.

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