DBRS Comments on Imperial Oil’s Participation in Acquisition of Celtic Exploration Ltd.

DBRS notes that Imperial Oil (Imperial or the Company, rated AA (high) and R-1 (high), Stable trends) has today announced that it intends to participate, along with ExxonMobil Canada, in the previously announced purchase of Celtic Exploration Ltd. (Celtic). With its participation, Imperial will acquire a 50% share of Celtic for approximately $1.55 billion net to the Company ($3.1 billion total transaction price).

Celtic is a Canadian oil and gas producer. With the transaction, Imperial will acquire 50% of approximately 649,000 net acres in the Montney (545,000 net acres) and Duvernay (104,000 net acres) shales and additional acreage in other areas of Alberta. Current production of the acreage to be acquired is 72 million cubic feet per day (mmcf/d) of natural gas (36 mmcf/d net to Imperial) and 4,000 barrels per day (b/d) of crude oil and natural gas liquids (2,000 b/d net to Imperial).

The transaction is expected to be funded using Imperial’s existing credit facilities and commercial paper program. The transaction is expected to be relatively credit neutral, with the pro-forma impact increasing debt-to-capital to approximately 16% and debt-to-cash flow to 0.65 times (from 8.4% and 0.31 times, respectively), both well within the current rating category.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Oil and Gas Companies, which can be found on our website under Methodologies.