CALGARY – Moody’s Investor Services has cut Suncor Energy Inc.’s credit rating as low oil prices weigh on the company’s financials.
The ratings agency downgraded the major oilsands producer one notch to a triple B rating as its cash flow and debt leverage have been hurt by oil prices trading below US$30 a barrel.
Moody’s also downgraded Canadian Oil Sands Ltd., which Suncor is in the middle of taking over, to a double B rating because of the company’s “very high cost base” and expectations of very high leverage for the next two years.
The ratings agency says Suncor has a stable outlook in part because its refinery business is helping buffer it from the effects of low oil prices.
In January Moody’s said was reviewing the debt ratings of more than a dozen Canadian oil and gas companies including Precision Drilling, Paramount Resources Ltd. and Talisman Energy Inc.
The company initiated the review after downgrading its outlook for oil prices and saying that even with a modest price recovery, oil producers and the companies that service them will experience rising financial stress.
Moody’s expects benchmark West Texas Intermediate crude to average about US$33 US a barrel this year, rising to US$38 next year and to US$43 a barrel in 2018.