TABLE OF CONTENTS
Introduction to DBRS Methodologies 5
Business and Financial Risk Overview 5
Stage 1: Industry Business Risk Rating for the Oil and Gas Industry 7
Defi nition of the Industry 7
The Business Risk Rating 7
Industry Profi tability and Cash Flow 7
Industry Competitive Landscape 8
Industry Stability 8
Industry Regulation 8
Other Inherent Industry Considerations 8
Stage 2: Issuer Rating 9
Business Risk Profi le 9
Financial Risk Profi le 9
Company-Specifi c Business Risk Factors 10
Primary Factors 11
Reserves of Core Operations (Depleting Reserves) 11
Cost Competitiveness (Price Taker) 11
Market Volatility (Commodity-Based) 12
Business Mix and Diversifi cation (Integration, Diversity, Size and Royalty Regime) 12
Capital Spending and Capital Management (Capital Intensive) 13
Additional Factors 13
Political Risks 13
Regulatory/Environmental Factors 13
Common Business Considerations 14
Country Risk 14
Corporate Governance 14
Company-Specifi c Financial Risk Factors 15
Key Metrics 15
Overall Considerations in Evaluating a Company’s Financial Risk Profi le 16
Cash Flow 16
Financial Leverage 16
Liquidity 17
Ratios Used in Analysis 17
Typical Cash Flow and Coverage Ratios 17
Typical Earnings Ratios 17
Typical Profi tability Ratios 17
Typical Segmented Earnings Statistics 17
Typical Netback Data (Barrel of Oil Equivalent) 17
Typical Key Operating Statistics 17
Typical Downstream Key Operating Statistics 18
Stage 3: Rating the Security 18
Appendix 19
Industry Business Risk Ratings 19
Industry Profi tability and Cash Flow 19
Industry Competitive Landscape 20
Industry Stability 20
Industry Regulation 20
Other Inherent Industry Considerations 20
Industry Business Risk Rating Defi nitions 21
Interrelationship between Financial and Business Risk 22
Defi nition of Issuer Rating 22
Short-Term and Long-Term Ratings 22