On March 6, 2026, Mizuho’s Michael Gorelick, Managing Director, Head of Ratings Advisory, led panel discussions on Canadian upstream and midstream energy companies with a group of senior analysts from S&P, Moody’s, Fitch and Morningstar DBRS during Mizuho’s 8th annual Rating Agency Energy Panel Conference at the Calgary Petroleum Club. We have summarized key messages from these two discussions below.
Calgary Rating Agency Energy Panels 2026: Key Takeaways from Upstream and Midstream Discussions
We enjoyed once again hosting senior analysts from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings and Morningstar DBRS in Calgary for our 8th annual rating agency energy panels, covering both upstream and midstream sectors. Against a backdrop of heightened geopolitical uncertainty, shifting commodity fundamentals and evolving capital allocation priorities, the discussions focused on how rating agencies are thinking about credit stability, financial policy discipline and longer-term structural risks across the Canadian energy complex.
Upstream: balance sheets strong, but discipline still critical
Panelists emphasized that Canadian upstream balance sheets remain in very good condition following several years of deleveraging, with ratings outlooks broadly stable. While near-term commodity price volatility driven by geopolitical events may provide windfall cash flow, agencies reiterated their focus on mid-cycle price assumptions and warned against extrapolating temporary strength in credit metrics into structural credit improvement. Capital allocation remains a key differentiator: shareholder returns and M&A are viewed as manageable so long as they are funded within cash flow and consistent with stated leverage targets, while more aggressive financial policies could constrain upside.
From a business risk perspective, agencies highlighted the resilience of long-cycle, low-decline oil sands assets, while also noting higher operating leverage, exposure to the WCS differential and ongoing uncertainty around regulatory and ESG-related costs. Integration of oil sands operations with refining assets continues to be viewed as a meaningful tool to reduce exposure to differentials, though even this is not a panacea. ESG considerations, while evolving, remain a modest but persistent factor in rating assessments for certain producers.
Midstream: growth opportunities balanced by leverage and execution risk
For the rated Canadian midstream energy companies, the rating agency analysts pointed to strong underlying demand fundamentals, particularly for natural gas infrastructure tied to LNG exports and rising power demand from data centers. At the same time, analysts from each of the agencies agreed that ratings impacts as these companies pursue these attractive growth opportunities will depend on contract quality, counterparty strength and execution discipline. While optimization projects and brownfield expansions are generally viewed as achievable, the agencies remain very cautious around the development of new large-scale pipelines without clearer regulation and risk-sharing mechanisms.
The midstream panel discussion also touched on the growing use of structured joint ventures and insurance capital, underscoring that the analytical treatment of this class of capital as debt or equity is highly structure-specific. Features such as guaranteed returns, puts, call options or volumetric commitments can materially affect analytical treatment and financial flexibility, reinforcing the importance of early engagement with rating agencies when evaluating these structures.
Bottom line
Across both panels, a consistent message emerged: ratings stability for Canadian energy companies is supported by strong assets and broadly healthy balance sheets, but upside remains constrained by financial policy choices, regulatory uncertainty and execution risk on large capital projects. As the sector navigates the next phase of growth, particularly around gas infrastructure and energy security, disciplined capital allocation and transparent engagement with stakeholders will remain central to credit outcomes.
Post summit note
Mizuho’s rating agency panels took place just days into the war with Iran against a highly uncertain backdrop and with agencies still formalizing their views on potential market and sector impacts. Since these discussions, agencies have offered additional tentative comments on possible ripple effects of the war on the North American energy sector. On the one hand, the agencies note that oil producers stand to benefit from near-term windfall profits given their unimpeded ability to sell into markets that have rallied sharply because of the supply-side shock from Iran’s closure of the Strait of Hormuz. On the other hand, natural gas producers are not expected to see material improvements in pricing conditions since LNG export terminals had already been running at capacity, limiting upside.
For midstream companies, assets typically operate under long-term contracts and are not positioned to benefit meaningfully from short-term market opportunities. Although new energy infrastructure projects take years to develop, lower geopolitical risk for North America may result in a security premium on access to supply from the region, providing a tailwind for new contracts to support the development of export projects such as LNG liquefaction terminals.
Beyond the immediate supply-side impacts of the war, rating agencies are cautious around potential impacts of more sustained disruptions to global supply chains. If oil, LNG and other key resources continue to be curtailed, elevated pricing or lack of supply may result in widespread economic slowdowns that can ripple across the global economy. While these second order impacts may not be apparent for some time, rating agencies are keeping an eye out for signs of emerging weakness and how impacts can spill across different industries.
