Morningstar DBRS Requests Comments on Proposed New Methodologies for Ratings in Oil & Gas PDP Reserves Asset Class

Morningstar DBRS is requesting comments on the following proposed new methodologies (the RFC Methodologies) to be used to determine credit ratings in the Oil & Gas PDP Reserves asset class. These methodologies present the criteria for which Oil & Gas PDP Reserves asset-backed securities (ABS) ratings are assigned and/or monitored:

-- “Rating Oil & Gas PDP Reserves Asset-Backed Securities” (Rating Oil & Gas PDP Reserves);
-- “Operational Risk Assessment for U.S. ABS Originators and Servicers”– U.S. Oil & Gas PDP Reserves Originator/Operator (U.S. Oil & Gas PDP Reserves Originators/Operator Exhibit) and U.S. Oil & Gas PDP Reserves Manager (U.S. Oil & Gas PDP Reserves Manager Exhibit). This methodology has combined the former two methodologies (“Operational Risk Assessment for U.S. ABS Originators” and “Operational Risk Assessment for U.S. ABS Servicers”) into one standalone methodology. No other changes were made as a result of combining the two methodologies.;
-- “Operational Risk Assessments for Canadian Structured Finance”—Canadian Oil & Gas PDP Reserves Originators/Servicers (Canadian Oil & Gas PDP Reserves Originators/Servicers Exhibit);
-- “Operational Risk Assessment for European Structured Finance Originators”—Oil & Gas PDP Reserves Originator/Operator (Sample Operational Risk Agenda for European ABS Originators—Additional Agenda Items—Exhibit);
-- “Operational Risk Assessment for European Structured Finance Servicers”—Oil & Gas PDP Reserves Manager (Sample Operational Risk Agenda for European ABS Servicers—Additional Agenda Items—Exhibit);
-- “Morningstar DBRS Master U.S. ABS Surveillance”—U.S. Oil & Gas PDP Reserves (U.S. Oil & Gas PDP Reserves ABS Surveillance Appendix);
-- “Master Canadian Structured Finance Surveillance Methodology”—Oil & Gas, Proved, Developed, and Producing Reserves (Canadian Oil & Gas PDP Reserves Surveillance Section); and
-- “Master European Structured Finance Surveillance Methodology”—European Oil & Gas PDP Reserves (European Oil & Gas PDP Reserves Surveillance Section).

Rating Oil & Gas PDP Reserves Transactions
Please refer to the Rating Oil & Gas PDP Reserves methodology, which presents the principal asset class methodology that Morningstar DBRS intends to apply to assign new credit ratings in the Oil & Gas PDP Reserves asset class following the finalization of the RFC Methodologies. The Rating Oil & Gas PDP Reserves ABS methodology provides a discussion of the key analytical and credit considerations, collateral quality and metrics, legal and regulatory considerations, and cash flow analysis applicable to Morningstar DBRS’ analysis of Oil & Gas PDP Reserves asset class transactions.

Oil & Gas PDP Reserves Originators Exhibit and Oil & Gas Reserves Servicers Exhibit
Please refer to the U.S. Oil & Gas PDP Reserves Originators/Operators Exhibit 37 and the U.S. Oil & Gas PDP Reserves Servicers Exhibit 38 in the “Operational Risk Assessment for U.S. ABS Originators and Servicers Methodology;” Canadian Oil & Gas PDP Reserves Originators/Servicers Exhibit in the “Operational Risk Assessments for Canadian Structured Finance methodology;” Exhibit 4—Sample Operational Risk Agenda for European ABS Originators in the “Operational Risk Assessment for European Structured Finance Originators;” and Exhibit 3—Sample Operational Risk Agenda—Additional Agenda Items in the “Operational Risk Assessment for European Structured Finance Servicers,” which formalize the sample lists of questions Morningstar DBRS expects to use in the applicable operational risk reviews of originators and servicers operating in the Oil & Gas PDP Reserves asset class, upon the finalization of the RFC Methodologies.

Oil & Gas PDP Reserves ABS Surveillance Appendices
Please refer to the U.S Oil & Gas PDP Reserves ABS Surveillance Appendix to the “Morningstar DBRS Master U.S. ABS Surveillance” methodology; Canadian Oil & Gas PDP Reserves Surveillance Section added to the “Master Canadian Structured Finance Surveillance Methodology;” and European Oil & Gas PDP Reserves Surveillance Section added to the “Master European Structured Finance Surveillance Methodology,” which present the criteria that Morningstar DBRS intends to apply in the applicable jurisdiction in connection with the surveillance of new Morningstar DBRS credit ratings in the Oil & Gas PDP Reserves asset class following the finalization of the RFC Methodologies.

Comments should be received on or before June 7, 2024. Please submit your comments to the following email address: sfcomments@morningstar.com.

Morningstar DBRS publishes on its website all comments received, except in cases where confidentiality is requested by the respondent.

Notes:
Morningstar DBRS methodologies are publicly available on its website dbrs.morningstar.com under Methodologies & Criteria.

For more information on this methodology or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.