DBRS Morningstar Assigns Credit Rating of A (low) With a Stable Trend to Suncor Energy Inc.’s Offering of Medium Term Notes (Unsecured)

DBRS Limited (DBRS Morningstar) assigned a credit rating of A (low) with a Stable trend to Suncor Energy Inc.’s (Suncor) $1.0 billion two-year and $0.5 billion three-year Medium Term Notes (unsecured) (the Notes). The assigned credit rating is based upon the credit rating on an already outstanding series of the above-mentioned debt instrument.

DBRS Morningstar notes that Suncor plans to use the net proceeds from the Notes offering to fund a portion of the purchase price for the TotalEnergies Canada acquisition and for general corporate purposes.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
DBRS Morningstar considered carbon and greenhouse gas (GHG) costs as a relevant environmental factor for Suncor. This factor is relevant because ever-increasing environmental regulations in Canada targeting the reduction of GHG emissions will likely limit the growth potential and add costs for all oil and gas companies in Canada and in particular for Suncor, which has greater exposure to more carbon-intensive oil sands developments and downstream assets. Suncor is in a stronger position today to face the challenges associated with reducing GHG emissions than it was a few years ago. Suncor has an action plan to reduce its GHG emissions by 10 megatonnes/year through 2030, and it has the financial flexibility and resources to navigate the energy transition path.

There were no Social or Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/416784 (July 4, 2023).

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

DBRS Morningstar applied the following principal methodologies:
-- Global Methodology for Rating Companies in the Oil and Gas and Oilfield Services Industries (August 16, 2023; https://www.dbrsmorningstar.com/research/419228)

--DBRS Morningstar Global Criteria: Commercial Paper Liquidity Support for Nonbank Issuers (Feb 24, 2023) https://www.dbrsmorningstar.com/research/410196.

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

A description of how DBRS Morningstar analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/397223.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar trends and credit ratings are under regular surveillance.

Information regarding DBRS Morningstar credit ratings, including definitions, policies, and methodologies, is available on www.dbrsmorningstar.com or contact us at [email protected].

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