DBRS Limited (DBRS Morningstar) noted that Canadian Natural Resources Limited (CNRL or the Company; rated BBB (high) with a Negative trend by DBRS Morningstar) has announced a definitive agreement to acquire all outstanding common shares of Painted Pony Energy Ltd. (Painted Pony) for a cash consideration of $0.69 per share.

The Company will also assume Painted Pony's outstanding total debt of approximately $350 million. The total value of the transaction is approximately $461 million. The transaction, subject to normal closing conditions, is likely to close in late Q3 or early Q4 2020.

The transaction includes properties in the Northeast British Columbia areas of Blair, Daiber, Kobes, and Townsend that are primarily geared to natural gas development. Painted Pony currently produces 49,600 barrels of oil equivalent per day (boe/d) (91% natural gas), which represents approximately 4% of CNRL's total production during Q2 2020. Painted Pony's land and production are within CNRL's core area, allowing the Company to leverage a significant amount of Painted Pony's prebuilt infrastructure and available transportation capacity.

Given that the transaction value represents approximately 1% of CNRL's enterprise value and about 4% of the Company's production, DBRS Morningstar believes that the acquisition should have no material impact on the Company's credit risk and business risk profiles and no impact on the Company's credit ratings.

ESG CONSIDERATIONS

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:

All figures are in Canadian dollars unless otherwise noted.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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