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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (13082)	10/29/1998 8:27:00 AM
From: Kerm Yerman	Respond to of 15196

REPORT / CBRS Cuts Suncor Debt Rating Outlook TORONTO, Oct 28 - Canadian Bond Rating Service said on Wednesday it revised its rating outlook for Suncor Energy Inc. to ''negative'' from ''stable'' due to continuing low oil prices, a rise in debt leverage and the large capital expenditures required to complete its oil sands plant expansion. CBRS, however, reaffirmed its current ratings on Calgary based Suncor's debt securities. It rates the oil and gas producer's commercial paper at A-1 and corporate credit at A. The service said spending commitments required for Suncor's ''Project Millennium'' -- a $2.2 billion expansion of its oil sands production facility in northeastern Alberta -- combined with low oil prices, could delay an anticipated reduction in debt leverage to 2002. ''With the increase in debt leverage, (Suncor's) debt protection measurements have begun to weaken,'' CBRS said. ''As the company proceeds with its Project Millennium, debt to cash flow, which is currently 2.2 times, could increase if commodity prices remain subdued.'' CBRS said Suncor's solid credit ratings reflect its strong operating performance, noting the company's cash flow increased 16 percent through the third quarter of 1998 versus last year due to higher oil and gas production, strong refining and marketing results and good results from pre-selling oil production. But Suncor's growth has come as its debt leverage has risen steadily since 1994, and is now approaching 50 percent debt to 50 percent equity, CBRS said. The negative outlook is further supported by recent very weak refining margins, which have resulted from slow demand growth, high inventory levels, and higher maintenance costs, the service said.