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Press Releases / 02.12.2013
Press Release as of 02.12.2013 «BerezkaGaz Ob» JSC CJSC AK&M Rating Agency affirmed the national scale credit rating of OGP CJSC at 'A'. The outlook is stable.
The 'A' rating indicates a high credit standing of the Company. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal. ObGasProcessing was founded in October 2008 to implement a pilot project of its parent company (MONOLIT LLC, later rebranded as BlueLine Project LLC) in Khanty-Mansi autonomous area - Yugra. The aim of the project is to build and commission an associated gas treatment (processing) unit at Rosneft Oil Company's Prirazlomnoye field. Total investment reached about 110 million US dollars including 48 million US dollars borrowed from Gazprombank. The associated gas treatment unit installation project fitted organically into Khanty-Mansi autonomous area – Yugra's environmental program assuming, among other objectives, that the associated petroleum gas utilization ratio in the republic will have been increased to at least 95% by the end of 2014 (at the end of 2011, almost 15% of the associated petroleum gas was still flared). This ensures administrative approval of OGP operations and offers further business development opportunities for the parent company in the region. We regard the high production efficiency combined with a progressive easing of the debt burden as the key positive rating driver for OGP CJSC. In 2013, the Company's 9-month revenue reached almost RUB 900 million, topping last year's result by 37.7%. Its debt on Gazprombank's loan (decreasing by 22% since the start of the year) currently accounts for about half of the Company's total borrowings. OGP's ability to pay back the loan fully at maturity (Q2 2017) is almost beyond doubt, especially given the projected growth of output following a local upgrade of equipment. The Company's credit worthiness is also backed by a long-term associated petroleum gas utilization agreement with Rosneft Oil Company whose growing production capacities at the Prirazlomnoye field in Khanty-Mansi autonomous area – Yugra ensure a reliable source of raw materials for OGP CJSC and create demand for the stripped gas coming from the associated gas treatment unit to be later used at the oilfield facilities (GTPPs, oilfield boiler houses, oil heaters). We also appreciate the project's advanced technologies and environmental commitment as a positive argument for the Company's rating position. The associated gas treatment unit is based on proven state-of-the-art foreign technologies (the equipment was developed and delivered by Canada's ThermoDesign Engineering Ltd.) and benefits from a modular configuration minimizing operating costs and extendable through additional modules to increase the unit capacity as necessary. The facility is located in immediate proximity to oil production sites, which keeps gas transportation costs as low as possible, resulting in significantly higher associated petroleum gas processing margins. At the same time, a number of risk factors need to be addressed: the Company continues to be saddled with heavy debts, its accumulated loss stays high (resulting in a negative market capitalization of RUB -913 million as of October 1, 2013), its production and financial performance is strongly dependent on the volumes and quality of the primary products delivered by Rosneft Oil Company. Besides, the lower sales margin (22.1% for 9 months 2013 against 36.7% in 2012) on account of the shrinking production, seasonal price adjustment and curbed gasoline prices exerts moderate pressure on the rating. OGP CJSC was established in late 2008 as a subsidiary of Monolit LLC (part of the Roza Mira group of companies) specializing in the development, creation and operation of gas treatment facilities. ObGasProcessing, the owner of a gas treatment unit engineering project at the Prirazlomnoye field in Khanty-Mansi autonomous area – Yugra, is currently operating this facility. For 9 months 2013, the unit produced about 72,000 tonnes of dry stripped gas, 76.100 tonnes of propane/butane mix, 17,000 tonnes of natural gasoline, whether matching or exceeding the designed production capacity on an annualized basis.
This press release is based on the statement of assigning a credit rating to OGP CJSC. The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's credit worthiness and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Company. CJSC AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties. CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010). AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), and the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia's Government AK&M Ratings count for the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.
CJSC AK&M Rating Agency
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