Assessing financial health across Canada's upstream

In response to the latest oil price collapse, we have expanded our Financial Health Index to cover 40 Canadian focused upstream companies. Operators were quick to slash capex, shut in production and cut dividends in order to strengthen financial positions – but to what result? In times of turmoil, size appears to matter. Large Cap operators with easy access to multiple streams of funding are in the strongest positions, while small juniors are the ones in most financial stress. Some have already entered CCAA proceedings. For several small to mid-sized operators, the situation appears dire with potential breaches of financial covenants and outstanding debt in excess of predicted cashflows. We expect defensive draws on credit will be made by those able, while others will be forced to restructure debt, whether in or out of bankruptcy.