PACRA as­signs en­tity rat­ings to OGDCL

The Pak Banker - - COMPANIES/BOSS -

IS­LAM­ABAD: Pak­istan Credit Rat­ing Agency (PACRA) has as­signed a long-term en­tity rat­ing of ' AAA' (Triple AAA) and short-term rat­ing of ' A1+' (A One Plus) to Oil and Gas De­vel­op­ment Com­pany Lim­ited (OGDCL).

The rat­ings re­flect OGDCL's strate­gic im­por­tance to the Govern­ment of Pak­istan (GoP) for be­ing the largest up­stream Oil and Gas com­pany in Pak­istan hav­ing pre­dom­i­nant share of re­cov­er­able hy­dro­car­bons re­serves and ex­plo­ration acreage. The rat­ings are de­pen­dent on sus­tained com­pet­i­tive po­si­tion­ing of the com­pany, while up­hold­ing good gov­er­nance prac­tices. Con­tin­ued dip in in­ter­na­tional oil prices in­flu­enc­ing busi­ness mar­gins and pre­vail­ing in­ter-cor­po­rate cir­cu­lar debt is­sue in the oil and gas in­dus­try of Pak­istan re­main key busi­ness con­cerns. The Com­pany is the lead­ing con­trib­u­tor in the Coun­try's ma­jor hy­dro­car­bon mix pro­duc­tion and its oil and gas pro­duc­tion con­tin­ues to ren­der for­eign ex­change sav­ings.

The com­pany's joint ven­ture op­er­a­tions give fur­ther busi­ness pen­e­tra­tion. The rat­ings in­cor­po­rate ro­bust fi­nan­cial pro­file of the com­pany as re­flected from debt-free bal­ance sheet, strong liq­uid­ity, and ac­cess to cap­i­tal mar­kets for rais­ing cap­i­tal in case of need. Be­ing part of oil chain, the com­pany is ex­posed to cir­cu­lar debt is­sue. Gas dis­tri­bu­tion com­pa­nies - SSGCL & SNGPL - are main con­trib­u­tors to­wards trade debt. OGDCL's busi­ness risk is low. In cog­nizance of de­clin­ing oil prices, the com­pany's ab­so­lute prof­itabil­ity has dropped; how­ever, it re­mained siz­able when com­pared to the planned fi­nan­cial re­quire­ments.

OGDCL is pur­su­ing an ag­gres­sive ex­plo­ration and pro­duc­tion strat­egy with the aim to make suc­cess­ful dis­cov­er­ies to en­hance oil and gas re­serves and pro­duc­tion vol­umes which would sup­port the busi­ness bot­tom-line, said of­fi­cial sources. Over the years, sig­nif­i­cant re­serves have been built up along with reg­u­lar in­vest­ment in­come stream. The rat­ings also in­cor­po­rate pre­dom­i­nant sov­er­eign own­er­ship struc­ture - owned by GoP (75%) The com­pany is en­gaged in ex­plo­ration, de­vel­op­ment, pro­duc­tion and sale of oil and gas in Pak­istan. OGDCL cov­ers 32% of Pak­istan's to­tal ex­plo­ration acreage awarded as of June 30, 2015. Hy­dro­car­bon re­serves of OGDCL are 61% of oil and 33% of nat­u­ral gas re­serves of the coun­try as at De­cem­ber 31, 2014. In FY15, the com­pany con­trib­uted around 45% and 29% of Pak­istan's to­tal oil and nat­u­ral gas pro­duc­tion, re­spec­tively. OGDCL is ma­jor­ity (75%) owned by GoP. The com­pany is listed on Pak­istan Stock Ex­change and Lon­don Stock Ex­change.

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