DBRS Removes Talisman Energy Inc. Ratings from Under Review with Developing Implications, Downgrades Ratings to BBB (low), Stable, Discontinues All Ratings

DBRS Limited (DBRS) has today removed all ratings of Talisman Energy Inc. (Talisman or the Company) from Under Review with Developing Implications and has downgraded the Issuer Rating and Unsecured Debentures & Medium-Term Notes ratings to BBB (low) from BBB, with Stable trends. DBRS has also downgraded the Company’s Preferred Shares rating from Pfd-3 to Pfd-3 (low), with Stable trend.

DBRS notes that the Acquisition of Talisman by Repsol S.A. (Repsol) was completed on May 8, 2015. Repsol acquired all outstanding common shares of Talisman at a price of CAD 8.00 per share and all outstanding preferred shares of Talisman at a price of CAD 25.1093 per share. Post the Acquisition, DBRS notes that Repsol has not guaranteed Talisman’s debt.

Consequently, DBRS continues to treat Talisman on a stand-alone basis, albeit acknowledging the close relationship between the two entities and the inherent support from the parent, Repsol. The negative rating actions reflect DBRS’s view that Talisman’s key credit metrics have weakened to a level no longer commensurate of a BBB rating and are not likely to materially recover over the near term, primarily due to the depressed commodity price environment. The Stable trend primarily reflects Talisman’s increased liquidity, largely as a result of related party facilities entered into with subsidiaries of Repsol subsequent to the Acquisition, as well as general support from Repsol.

Concurrently, DBRS at its discretion, has withdrawn all of the Company’s ratings, as outlined in the table at the end of this press release. The withdrawal of the ratings is not an expression of the credit quality of the issuer nor the credit quality of the Unsecured Debentures and the Medium-Term Notes and the Preferred Shares.

Notes:
All figures are in U.S. dollars unless otherwise noted.

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 methodologies are Rating Companies in the Oil and Gas Industry (September 2015) and DBRS Criteria: Preferred Share and Hybrid Criteria for Corporate Issuers (January 2015), which can be found on our website under Methodologies.