Morningstar DBRS Assigns Credit Rating of BBB (high) With a Stable Trend to Tourmaline Oil Corp.’s Senior Unsecured Notes Offering

DBRS Limited (Morningstar DBRS) assigned a credit rating of BBB (high) with a Stable trend to Tourmaline Oil Corp.’s (Tourmaline or the Company; rated BBB (high) with a Stable trend by Morningstar DBRS) $250 million 4.856% Senior Unsecured Notes, Series 3 due May 2027 (the Notes). Morningstar DBRS notes that Tourmaline plans to use the net proceeds from the Notes offering for refinancing its existing indebtedness and for general corporate purposes.

The credit rating assigned to this newly issued debt instrument is based on the rating of an already-outstanding debt series of the above-mentioned debt instruments.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
Environmental (E) Factors
Morningstar DBRS considered carbon and greenhouse gas (GHG) emission costs as a relevant Environmental factor to Tourmaline's ratings. 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, including Tourmaline. While the Company's strong balance sheet and predominant exposure to natural gas provide it with the flexibility to navigate the energy transition path, Morningstar DBRS considers this factor relevant to the credit ratings.

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

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024) https://dbrs.morningstar.com/research/427030/morningstar-dbrs-criteria:-approach-to-environmental,-social,-and-governance-risk-factors-in-credit-ratings

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)

(A) Weighting of BRA Factors
In the analysis of Tourmaline, the BRA factors are considered in the order of importance contemplated in the methodology.

(B) Weighting of FRA Factors
In the analysis of Tourmaline, the FRA factors are considered in the order of importance contemplated in the methodology.

(C) Weighting of the BRA and the FRA
In the analysis of Tourmaline, the BRA carries greater weight than the FRA.

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

Morningstar DBRS applied the following principal methodology:

Global Methodology for Rating Companies in the Oil and Gas and Oilfield Services Industries (15 April 2024)
https://dbrs.morningstar.com/research/431177/global-methodology-for-rating-companies-in-the-oil-and-gas-and-oilfield-services-industries

The following methodology has also been applied:

Morningstar DBRS Global Corporate Criteria (15 April 2024)
https://dbrs.morningstar.com/research/431186/morningstar-dbrs-global-corporate-criteria

Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024) https://dbrs.morningstar.com/research/427030/morningstar-dbrs-criteria:-approach-to-environmental,-social,-and-governance-risk-factors-in-credit-ratings

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

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

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

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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