Lahore, January 16, 2019 (PPI-OT): Spud Energy Pty Limited (Pakistan Branch) is engaged in upstream Oil and Gas business in Pakistan. The company is a wholly owned subsidiary of Jura Energy Corporation, public company listed on TSX Venture Exchange. The Board of Jura Energy Corporation, comprising six members, exercises oversight over the company. The control environment is considered a plus. Auditors of the company are A. F. Ferguson and Co, Chartered Accountants.
Currently, the company has 40% working interest in Zarghun South Development and Production lease, from where the company is predominantly deriving its revenue. The other revenue stream is from the Guddu Block with four different Development and Production leases. The impact of circular debt prevailing in the country is a concern, yet the lag is not significant in case of Spud Energy Pty Limited (Pakistan Branch) particularly.
The strength of the business reflects in the US dollar based pricing and its collection in US dollar directly into the foreign currency bank accounts. Spud Energy Pty Limited’s (Pakistan Branch) management is pursuing an expansion strategy with the aim to make additions to its revenue stream which would support the business bottom-line. This is expected to be debt driven. Yet, the cash flow position is considered supportive. The company has a receivable from a group company, where the operational revenues are close to materialization.
The ratings are dependent on sustained competitive positioning of the company, while upholding good governance practices through its parent Company i.e. Jura Energy Corporation. Volatility in business margins and prevailing inter-corporate circular debt issue in the oil and gas industry of Pakistan remain key areas of consideration. Financial discipline is considered core to the ratings, with enduring emphasis on maintaining relevant coverages and fulfilling the debt covenants.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com