February 15, 2019 (MLN): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long-term entity rating of Oil & Gas Development Company Limited (OGDCL) at ‘AAA’ (Triple A) and short-term entity rating at A-1+ (A One Plus). Outlook on the assigned rating is ‘Stable’.
The assigned ratings of OGDCL incorporate its ownership structure with majority shares held by the Government of Pakistan. The low business risk of the Company emanates from its robust margins providing considerable cushion against international oil price fluctuations.
Moreover, OGDCL is the leading Company in exploration and production sector in Pakistan. The Company has an assured product off-take amid excess demand of oil & gas vis-à-vis local supply.
The ratings also take into account low financial risk profile emanating from debt free capital structure and strong liquidity indicators. Furthermore, higher realized price of oil, gas and LPG coupled with increased LPG production and devaluation of Pak Rupee against the US Dollar during the period under review provided impetus to the Company’s profitability.
Despite rising trend in industry-wide inter-corporate circular debt, the Company continues to manage its capital expenditure requirements through strong internal cash flows.
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