KARACHI (February 15 2007): The JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned a medium to long-term entity rating of AAA (Triple A) and short-term rating of A1+ (A One Plus) to Oil and Gas Development Company Limited (OGDCL). The outlook on the medium to long-term rating is 'Stable'.

The ratings primarily take into account OGDCL's predominantly government held shareholding structure and its position as the largest exploration and production company in Pakistan with reserves constituting 31percent of the country's oil and gas reserves as on June 30, 2006.

The company has a very strong financial profile in the historical absence of gearing on the balance-sheet, with even the heavy expenditure required for exploration activities being comfortably met from internal cash generation with enough margin to have allowed the company to build a significant liquidity cushion over the years.

Following the corporatisation of the organisation in 1997, its management has been engaged in developing systems and strengthening its human resource base in order to be able to further improve the performance of the company. Along with this, the management has also embarked on an increasingly aggressive exploration programme by maximising usage of available resources in order to increase the pace of new oil and gas discoveries in the country.

The JCR-VIS will closely monitor the government's plan regarding divestment in OGDCL, which is on the privatisation list along with a number of other entities. So far, the government has opted to divest on a piece-meal basis on both the local and the foreign bourses. However, any move to divest majority shareholding and/or management control, would need to be assessed for the impact on the company's risk profile.-PR

Copyright Business Recorder, 2007