Ranking Motion: Moody’s affirms Teine’s B2 CFR; outlook steady
International Credit score Analysis – 11 Dec 2020
Toronto, December 11, 2020 — Moody’s Traders Service, (“Moody’s”) has affirmed Teine Vitality Ltd.’s (Teine) Company Household Ranking (CFR) of B2, Likelihood of Default Ranking of B2-PD, and the B3 senior unsecured notes ranking. The ranking outlook stays steady.
“The affirmation displays our expectation that Teine’s credit score metrics will stay sturdy for its ranking regardless of a modest decline in manufacturing in 2021” acknowledged Jonathan Reid, Moody’s Analyst.
..Issuer: Teine Vitality Ltd.
…. Company Household Ranking, Affirmed B2
…. Likelihood of Default Ranking, Affirmed B2-PD
….Senior Unsecured Common Bond/Debenture, Affirmed B3 (LGD5)
..Issuer: Teine Vitality Ltd.
….Outlook, Stays Steady
Teine Vitality Ltd.’s (Teine) B2 company household ranking (CFR) is supported by: (1) sturdy credit score metrics regardless of a difficult business atmosphere, with retained money move to debt of round 40%, EBITDA to curiosity round 6.5x and LFCR round 1.7x over the following 12-18 months; (2) a excessive proportion of sunshine oil (about 70%) of complete manufacturing; and (3) good liquidity supported by our expectation that Teine will generate constructive free money move over the following 12 to 18 months. Teine is challenged by: (1) focus threat, with 80% of manufacturing coming from standard oil in a single formation, the Viking, in southwestern Saskatchewan; (2) excessive company decline fee (about 34%); and (3) modest manufacturing quantity, which is able to decline barely: to round 25,000 boe/d (internet of royalties) in 2021 from round 27,000 boe/d in 2020.
In accordance with Moody’s Loss Given Default for Speculative-Grade Corporations (LGD) Methodology, the US$350 million senior unsecured notes are rated B3, one notch under the B2 CFR, reflecting the precedence rating of the C$475 million senior secured borrowing base revolving credit score services in Teine’s capital construction.
Teine’s liquidity is nice over the following 12 months, with complete sources of round C$430 million and no necessary debt amortization over that interval. Teine has round C$27 million in money on its stability sheet (as of Sept/20) and round C$375 million of availability beneath its C$475 million of credit score services (comprised of a C$50 million working facility and a C$425 million revolving credit score facility). We anticipate the corporate to generate round C$30 million in free money move over the following 4 quarters. Teine’s working credit score facility and revolving credit score facility time period out in Could 2021 with any drawings due Could 2022, and the corporate’s US$350 million senior unsecured notes (equal to round C$385 million after hedges) mature in September 2022. Alternate sources of liquidity are considerably restricted as its property are pledged as collateral to the secured revolving credit score facility.
The steady outlook displays our expectation that Teine will keep sturdy leverage and protection metrics and good liquidity over the following 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ranking may very well be upgraded if Teine can develop its manufacturing in the direction of 35,000 boe/d internet of royalties (round 28,000 boe/d as of LTM 9/30/2020), whereas sustaining retained money move to debt above 50% (51% as of LTM 9/30/2020) and an LFCR above 1.5x (2.1x as of LTM 9/30/2020).
The ranking may very well be downgraded if manufacturing approached 20,000 boe/d (round 28,000 boe/d as of LTM 9/30/2020), if retained money move to debt falls under 30% or if liquidity deteriorates.
The principal methodology utilized in these scores was Unbiased Exploration and Manufacturing Trade revealed in Could 2017 and accessible at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1056808. Alternatively, please see the Ranking Methodologies web page on www.moodys.com for a replica of this technique.
Teine Vitality Ltd. is a personal Calgary, Alberta-based impartial exploration and manufacturing firm with a concentrate on the Viking gentle oil play in southwestern Saskatchewan. The Canadian Pension Plan Funding Board (CPPIB) is almost all proprietor of Teine.
For additional specification of Moody’s key ranking assumptions and sensitivity evaluation, see the sections Methodology Assumptions and Sensitivity to Assumptions within the disclosure type. Moody’s Ranking Symbols and Definitions might be discovered at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For scores issued on a program, sequence, class/class of debt or safety this announcement supplies sure regulatory disclosures in relation to every ranking of a subsequently issued bond or notice of the identical sequence, class/class of debt, safety or pursuant to a program for which the scores are derived completely from present scores in accordance with Moody’s ranking practices. For scores issued on a assist supplier, this announcement supplies sure regulatory disclosures in relation to the credit standing motion on the assist supplier and in relation to every specific credit standing motion for securities that derive their credit score scores from the assist supplier’s credit standing. For provisional scores, this announcement supplies sure regulatory disclosures in relation to the provisional ranking assigned, and in relation to a definitive ranking which may be assigned subsequent to the ultimate issuance of the debt, in every case the place the transaction construction and phrases haven’t modified previous to the project of the definitive ranking in a way that will have affected the ranking. For additional info please see the scores tab on the issuer/entity web page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit score assist from the first entity(ies) of this credit standing motion, and whose scores might change on account of this credit standing motion, the related regulatory disclosures can be these of the guarantor entity. Exceptions to this strategy exist for the next disclosures, if relevant to jurisdiction: Ancillary Companies, Disclosure to rated entity, Disclosure from rated entity.
The scores have been disclosed to the rated entity or its designated agent(s) and issued with no modification ensuing from that disclosure.
These scores are solicited. Please consult with Moody’s Coverage for Designating and Assigning Unsolicited Credit score Scores accessible on its web site www.moodys.com.
Regulatory disclosures contained on this press launch apply to the credit standing and, if relevant, the associated ranking outlook or ranking assessment.
Moody’s basic rules for assessing environmental, social and governance (ESG) dangers in our credit score evaluation might be discovered at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
The International Scale Credit score Ranking on this Credit score Ranking Announcement was issued by one in every of Moody’s associates exterior the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Important 60322, Germany, in accordance with Artwork.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit score Ranking Companies. Additional info on the EU endorsement standing and on the Moody’s workplace that issued the credit standing is obtainable on www.moodys.com.
Please see www.moodys.com for any updates on adjustments to the lead ranking analyst and to the Moody’s authorized entity that has issued the ranking.
Please see the scores tab on the issuer/entity web page on www.moodys.com for extra regulatory disclosures for every credit standing.
Jonathan Reid Analyst Company Finance Group Moody's Canada Inc. 70 York Avenue Suite 1400 Toronto, ON M5J 1S9 Canada JOURNALISTS: 1 212 553 0376 Shopper Service: 1 212 553 1653 Donald S. Carter, CFA MD - Company Finance Company Finance Group JOURNALISTS: 1 212 553 0376 Shopper Service: 1 212 553 1653 Releasing Workplace: Moody's Canada Inc. 70 York Avenue Suite 1400 Toronto, ON M5J 1S9 Canada JOURNALISTS: 1 212 553 0376 Shopper Service: 1 212 553 1653
© 2020 Moody’s Company, Moody’s Traders Service, Inc., Moody’s Analytics, Inc. and/or their licensors and associates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY’S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS,ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
MOODY’S CREDIT RATINGS,ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All info contained herein is obtained by MOODY’S from sources believed by it to be correct and dependable. Due to the opportunity of human or mechanical error in addition to different elements, nonetheless, all info contained herein is supplied “AS IS” with out guarantee of any sort. MOODY’S adopts all crucial measures in order that the knowledge it makes use of in assigning a credit standing is of adequate high quality and from sources MOODY’S considers to be dependable together with, when acceptable, impartial third-party sources. Nonetheless, MOODY’S isn’t an auditor and can’t in each occasion independently confirm or validate info acquired within the ranking course of or in getting ready its Publications.
To the extent permitted by regulation, MOODY’S and its administrators, officers, workers, brokers, representatives, licensors and suppliers disclaim legal responsibility to any particular person or entity for any oblique, particular, consequential, or incidental losses or damages in any way arising from or in reference to the knowledge contained herein or using or lack of ability to make use of any such info, even when MOODY’S or any of its administrators, officers, workers, brokers, representatives, licensors or suppliers is suggested prematurely of the opportunity of such losses or damages, together with however not restricted to: (a) any lack of current or potential income or (b) any loss or harm arising the place the related monetary instrument isn’t the topic of a selected credit standing assigned by MOODY’S.
To the extent permitted by regulation, MOODY’S and its administrators, officers, workers, brokers, representatives, licensors and suppliers disclaim legal responsibility for any direct or compensatory losses or damages brought about to any particular person or entity, together with however not restricted to by any negligence (however excluding fraud, willful misconduct or some other kind of legal responsibility that, for the avoidance of doubt, by regulation can’t be excluded) on the a part of, or any contingency inside or past the management of, MOODY’S or any of its administrators, officers, workers, brokers, representatives, licensors or suppliers, arising from or in reference to the knowledge contained herein or using or lack of ability to make use of any such info.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Traders Service, Inc., a wholly-owned credit standing company subsidiary of Moody’s Company (“MCO”), hereby discloses that almost all issuers of debt securities (together with company and municipal bonds, debentures, notes and business paper) and most popular inventory rated by Moody’s Traders Service, Inc. have, previous to project of any credit standing, agreed to pay to Moody’s Traders Service, Inc. for credit score scores opinions and companies rendered by it charges starting from $1,000 to roughly $2,700,000. MCO and Moody’s traders Service additionally keep insurance policies and procedures to handle the independence of Moody’s Traders Service credit score scores and credit standing processes. Info concerning sure affiliations which will exist between administrators of MCO and rated entities, and between entities who maintain credit score scores from Moody’s Traders Service and have additionally publicly reported to the SEC an possession curiosity in MCO of greater than 5%, is posted yearly at www.moodys.com beneath the heading “Investor Relations — Company Governance — Director and Shareholder Affiliation Coverage.”
Extra phrases for Australia solely: Any publication into Australia of this doc is pursuant to the Australian Monetary Companies License of MOODY’S affiliate, Moody’s Traders Service Pty Restricted ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as relevant). This doc is meant to be supplied solely to “wholesale purchasers” throughout the that means of part 761G of the Firms Act 2001. By persevering with to entry this doc from inside Australia, you signify to MOODY’S that you’re, or are accessing the doc as a consultant of, a “wholesale consumer” and that neither you nor the entity you signify will immediately or not directly disseminate this doc or its contents to “retail purchasers” throughout the that means of part 761G of the Firms Act 2001. MOODY’S credit standing is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the fairness securities of the issuer or any type of safety that’s accessible to retail traders.
Extra phrases for Japan solely: Moody’s Japan Okay.Okay. (“MJKK”) is a wholly-owned credit standing company subsidiary of Moody’s Group Japan G.Okay., which is wholly-owned by Moody’s Abroad Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan Okay.Okay. (“MSFJ”) is a wholly-owned credit standing company subsidiary of MJKK. MSFJ isn’t a Nationally Acknowledged Statistical Ranking Group (“NRSRO”). Subsequently, credit score scores assigned by MSFJ are Non-NRSRO Credit score Scores. Non-NRSRO Credit score Scores are assigned by an entity that’s not a NRSRO and, consequently, the rated obligation is not going to qualify for sure kinds of remedy beneath U.S. legal guidelines. MJKK and MSFJ are credit standing businesses registered with the Japan Monetary Companies Company and their registration numbers are FSA Commissioner (Scores) No. 2 and three respectively.
MJKK or MSFJ (as relevant) hereby disclose that almost all issuers of debt securities (together with company and municipal bonds, debentures, notes and business paper) and most popular inventory rated by MJKK or MSFJ (as relevant) have, previous to project of any credit standing, agreed to pay to MJKK or MSFJ (as relevant) for credit score scores opinions and companies rendered by it charges starting from JPY125,000 to roughly JPY250,000,000.
MJKK and MSFJ additionally keep insurance policies and procedures to handle Japanese regulatory necessities.