Karachi, December 17, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Oil and 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-free debt of Government of Pakistan (GoP). The short-term rating of ‘A-1+’ denotes highest certainty of timely payment, liquidity factors are outstanding and safety is just below risk-free short-term obligations of GoP. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on January 25, 2021.

The assigned ratings to OGDCL incorporate sound sponsor profile as majority shares of the company are held by GoP. The ratings also reflect systemic importance of the Company to the national economy as the largest upstream Oil and Gas Company in Pakistan. The low business risk of the company emanates from its robust margins, providing considerable cushion against volatility in international oil prices. Higher production of crude oil and LPG coupled with increase in average realized prices of gas and LPG have contributed to higher revenues in the outgoing year.

Despite some decrease in net profitability due to exchange loss and lower finance income, the company generated healthy bottomline in FY21. Moreover, recovery in oil price and rising trend in gas and LPG prices reflected positively on Company’s financials in 1QFY22. OGDCL has an assured product off-take amid excess demand of oil and gas vis-à-vis local supply. Ratings also take into account low financial risk profile of the Company as evident from debt-free capital structure and strong liquidity profile. Despite rising trend in industry wide inter-corporate debt, the Company continues to manage its capital expenditure requirements through internal cash flows.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/