Japan Credit Rating-Vital Information Service Reaffirms Entity Ratings of Oil and Gas Development Company Limited at AAA/A-1+,

General Business News

Karachi: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Oil and Gas Development Company Limited (OGDCL) at ‘AAA/A-1+’ (Triple A / A One Plus). Outlook on the medium to long-term rating is ‘Stable’.

The ratings derive strength from strong sponsorship with about three-fourth of the shareholding maintained with the Government of Pakistan. OGDCL is the largest E and P company in Pakistan having maintained its market leadership in both oil and gas production. Profitability of organizations operating in the E and P sector is directly linked to the international crude oil prices. Given the increasing trend in international average crude oil prices, bottom line results of OGDCL have remained strong with higher net profit reported in the outgoing year despite recording price discount of considerable magnitude during the year.

While inter-corporate debt has remained a major area of concern, inherent strength is evident from the fact that the company has been able to meet its operational expenses with current level of cash flows. The company has standby credit facilities from different banks, which have not been availed up till now. However, any considerable further deterioration in the circular debt crisis may trigger the need to avail this option. Nonetheless, liquidity profile of OGDCL has remained strong despite carrying huge amount of trade receivables on its books given that its operations are fully financed by equity.

Provided that the production has outpaced additions to reserves, there has been a declining trend, though modest, in oil and gas reserves maintained by the company. Nonetheless, OGDCL is currently undertaking projects of large and small magnitude that are expected to provide additional fossil fuel to the system. Moreover, owing to improvement in security conditions, the company was able to resume exploration activities in the Zin block (Baluchistan).

For more information, contact:
Mr. Javed Callea
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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