A Canadian Natural Resources pump jack pumps oil out of the ground near Dorothy, Alta., in 2009. With the oil-and-gas industry slowing because of the slide in oil prices, many people in the oil patch are looking to retrain.Todd Korol/Reuters
Moody's Investors Service has downgraded the debt of Canadian Natural Resources Ltd., citing high leverage and weakening cash flow as the company seeks to complete a massive expansion at its Horizon oil sands mine.
Moody's late on Thursday lowered its ratings of senior unsecured notes for the Calgary-based producer two notches from Baa1 to Baa3, or one level above junk status. Moody's said CNRL's outlook is "negative" as oil prices hover at severely depressed levels.
"This downgrade of Canadian Natural Resources to Baa3 reflects its diminished cash flow and very high leverage in the currently weak commodities price environment," Terry Marshall, Moody's senior vice-president, said in a statement.
"Leverage is further negatively impacted by the significant debt funded capital being incurred through 2017 to complete the Horizon expansion," he said.
The move is the latest downgrade of a major Canadian oil and gas firm by Moody's. This month, it chopped ratings on debt held by Encana Corp. and Cenovus Energy Inc. to junk status. It has also lowered its rating on Suncor Energy Inc. to Baa1, a level still considered investment grade.
CNRL has budgeted between $4.5-billion and $5-billion this year, although the company has said it could chop that by as much as $1.5-billion. Its expanding Horizon mine is due to eventually pump 250,000 barrels per day.