Moody's upgrades MEG

Moody's Investors Service said it upgraded MEG Energy Corp.'s corporate family rating, $185 million senior first secured bank revolver and $1 billion senior first secured term loan ratings to B1.

The outlook is stable. Moody's also assigned a speculative grade liquidity rating of SGL1.

Moody's said the upgrade reflects the $660 million net proceeds received from the recently completed initial public offering and the success to date of the ramp-up of phases 1 and 2 of MEG's Christina Lake Steam Assisted Gravity Drainage development.

The B1 corporate family rating reflects MEG's production of bitumen and favorable steam oil ratio, as well as the company's significant cash position, which along with anticipated cash flow, according to the agency.

The rating also considers MEG's substantial reserves and land position in key productive areas of the Athabasca Oil Sands region and 50% ownership of the Access pipeline, the agency said.

However, the rating also reflects a high debt level, MEG's still relatively small production base and its associated operating risks, and the execution risk of constructing and ramping up phase 2B to targeted levels through 2014, Moody's said.

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