DBRS Assigns New Rating to SBM Deep Panuke S.A.

DBRS has today assigned a new rating of BBB (low) to the Senior Secured Notes (the Notes) issued by SBM Deep Panuke S.A. (the Issuer) with respect to a Production Facility Centre (the Platform). The Platform was installed in the Atlantic Ocean offshore Nova Scotia in August 2013 and passed its required performance acceptance tests on December 11, 2013. Encana Corporation (Encana; rated BBB with Stable trend by DBRS), which owns the licence to the Deep Panuke field, has leased the Platform from the Issuer under a charter agreement expiring no earlier than May 2022 (the Charter Agreement). The Notes are secured against the Platform and Charter Agreement and fully amortize by December 2021, five months before the earliest Charter Agreement expiry date. The Issuer is ultimately owned by SBM Offshore N.V. (SBM Offshore), an experienced and capable constructor and operator of offshore oil and gas production facilities. The Platform has a design capacity to produce and export 300 million cubic feet per day of natural gas. Encana has engaged SBM Nova Scotia Contractors Inc. (the Operator), also owned by SBM Offshore, to operate the Platform and related subsea infrastructure. The Charter Agreement is a bareboat lease, and Encana pays a fixed daily lease rate to the Issuer regardless of the performance of the Platform, natural gas production rate, sales price or events of force majeure. The circumstances under which the Charter Agreement would be terminated are considered by DBRS to be remote. If the Charter Agreement is terminated by or because of Encana, the contractual termination payment from Encana (and the debt service reserve account or letter of credit) is sufficient to fully repay the Notes at any point in their life. If the Charter Agreement is terminated due to force majeure, the 90% of the contractual termination payment from Encana, together with trapped cash and the debt service reserve, is also sufficient to fully repay the Notes at any point.

Notes:
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union

The applicable methodology is Rating Project Finance, which can be found on our website under Methodologies.