DBRS Assigns BBB (high) Rating, Under Review with Developing Implications, to Canadian Natural Resources ’ U.S. and Canadian Dollar Notes Offering

DBRS Limited (DBRS) has today assigned a rating of BBB (high) to Canadian Natural Resources Limited (CNRL or the Company) U.S. dollar-denominated Unsecured Notes (the USD Notes) and Canadian dollar-denominated Unsecured Medium-Term Notes (the CDN Notes) following the Company’s announcement regarding the closing of offerings for (1) 5.5-, ten- and 30-year notes for an aggregate amount of USD 3.0 billion and (2) three-, 9.5-, and 30-year medium-term notes for an aggregate amount of $1.8 billion. On March 9, 2017, DBRS placed the Company’s BBB (high) Issuer Rating, the BBB (high) Long-Term Debt rating and the R-2 (high) Commercial Paper rating Under Review with Developing Implications following CNRL’s announcement that it had entered into an arrangement with Shell Canada Limited (Shell Canada) and Marathon Oil Canada Corporation (Marathon Oil Canada) to acquire a 70% direct and indirect interest in the Athabasca Oil Sands Project and additional interests in other producing and non-producing properties in Western Canada for a total consideration of approximately $12.7 billion. The USD Notes and Canadian Notes will rank pari passu with CNRL’s existing senior unsecured debt. The net proceeds of the offerings combined with a Term Loan Facility are planned to be used to (1) finance the acquisitions from Shell Canada and Marathon Oil Canada of the above-noted oil and gas interests and (2) pay certain fees and expenses related to the acquisitions.

DBRS has noted that the acquisitions strengthen the Company’s business risk profile. Furthermore, DBRS considered the impact on the Company’s key financial metrics to be somewhat negative in the near term but anticipated that the Company’s key credit metrics would recover to support a BBB (high) rating during 2018 based on DBRS’s current outlook for an average USD 50/barrel (bbl) West Texas Intermediate (WTI) oil price in 2017 and USD 55/bbl in 2018 combined with the Company’s debt repayment plans. Nonetheless, DBRS may consider a negative rating action should oil prices deteriorate significantly for an extended period and/or debt repayments are significantly lower than currently expected such that the recovery of the key credit metrics is pushed materially beyond 2018. On balance with successful completion of the acquisitions and assuming an oil price outlook supportive of a WTI oil price around or above USD 50/bbl, DBRS is likely to maintain CNRL’s BBB (high) Issuer Rating and Unsecured Long-Term Debt rating and the Company’s R-2 (high) Commercial Paper rating. DBRS anticipates resolving the Under Review status when the transaction closes.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is Rating Companies in the Oil and Gas Industry (September 2016), which can be found on dbrs.com under Methodologies.

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