ISLAMABAD – VIS Credit Rating Company Limited (VIS) has reaffirmed entityratings of Oil & Gas Development Company Limited (OGDCL) at ‘AAA/A-1+’(Triple A/A-One Plus).
The medium to long-term rating of ‘AAA’ denotes highest credit quality,with negligible risk factors, being only slightly more than for risk-freedebt of Government of Pakistan.
The short-term rating of ‘A-1+’ denotes highest certainty of timelypayment, liquidity factors are outstanding and safety is just below riskfree short-term obligations of Government of Pakistan. Outlook on theassigned ratings is ‘Stable’.
The assigned ratings of OGDCL incorporate its ownership structure withmajority shares held by the Government of Pakistan.
The low business risk of the Company emanates from its robust margins,providing considerable cushion against volatility in international oilprices.
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Moreover, OGDCL is the leading Company in exploration and production sectorof Pakistan. The Company has an assured product off-take amid excess demandof oil & gas vis-à-vis local supply.
During FY19, OGDCL registered healthy growth in revenue and profits, drivenlargely by higher LPG production, considerable increase in the averagerealized price of hydrocarbons and rupee depreciation.The ratings also take into account low financial risk profile, emanatingfrom debt-free capital structure and strong liquidity indicators.
Despite rising trend in industry-wide inter-corporate debt, the Companycontinues to manage its capital expenditure requirements through internalcash flows.
