Press Releases / 13.11.2014
Press Release as of 13.11.2014
«BerezkaGaz Ob» JSC
CJSC AK&M Rating Agency affirmed the national scale credit rating of OGP CJSC at 'A' tier 3. The outlook is stable.
The 'A' rating indicates that OGP CJSC qualifies as a highly creditworthy borrower. The risk of a failure to meet obligations in time is low, the full or partial debt restructuring risk is minimal.
OGP operating as a structural part of the BlueLine group was founded in October 2008 as a subsidiary of BlueLine Project LLC. The core activity of the Company is the operation of an industrial complex the backbone of which is an associated petroleum gas (APG) treatment unit. The industrial facility is located in Khanty-Mansi autonomous area – Yugra close to the oil-heating unit of the Prirazlomnoye field operated by LLC RN-Yuganskneftegaz, 150 km away from the nearest railway station Pyt-Yakh..
The APG treatment by OGP CJSC contributes to Khanty-Mansi autonomous area – Yugra's environmental program to increase the APG utilization ratio by the end of 2014, which ensures additional partnership-inspired administrative leverage having a positive impact on OGP's current activity and provides favorable development prospects.
The credit rating is primarily supported by the high production efficiency as proven by the growing operational profitability: from 27% in 2013, this ratio increased 1.27 times to 34.3% in the first half of 2014 and is projected to reach 46% at the end of the year. The company's sales revenue continues to grow: the company earned RUB 1,287.1 million from sales for the 9-month period in 2014 (+43.3% year-on-year).
The current gas reciprocating power plant construction and commissioning project has a positive effect on the Company's credit rating. The gas reciprocating power plant expected to be launched in the second quarter of 2015 will enable the company to boost 12-month sales revenues by ca. RUB 440 million (approximately 25% of the projected 2014 revenue), with ensuing major improvements in the Company's financial performance.
We regard the long-term APG supply agreement with Rosneft Oil Company as another positive rating driver. OGP's capacity to increase production of hydrocarbons at Prirazlomnoye in Khanty-Mansi autonomous area - Yugra provides additional guarantees of uninterrupted supplies and offers favorable conditions for increasing sales.
OGP performance analysis factors in the application by OGP of cutting-edge process solutions provided by the leading Western specialists. The APG treatment unit ensures the high APG processing ratio. Its location directly at Prirazlomnoye minimizes gas transmission costs. The application of a modular configuration principle enables to expand processing capacities by installing additional modules as necessary.
We appreciate the company's significant contribution to the solution of environmental issues related to the development of oil and gas deposits. Flaring of APG results in emissions of quite a number of polluting substances which, accumulating in oil and gas production regions, add to the greenhouse effect damaging the climate of the whole planet. The AGP processing and further utilization reduce emissions of greenhouse gases by up to 270 thousand tpa (in the CO2 equivalent), and can be regarded as an environmentally friendly technology.
The high debt burden on the Company coupled with a significant accrued loss, remains the key negative rating driver for OGP. The Company's debt increased by 28% for the 9-month period in 2014 and will reach RUB 1,101 million in 2015. The negative capitalization of OGP continues to increase, its absolute level increasing by 21% since the start of the year to RUB 1,184 million as of July 1, 2014.
The continuing growth of the US dollar exchange rate and the uncertainty as to its behavior in 2015 adds to the risk factors affecting the Company's activities. The Russian ruble depreciation pushes up interest payments and increases the debt burden on OGP whose loans are largely denominated in foreign currencies. At the same time, the reduction of foreign currency-denominated accounts payable in 2014 (from 133.7 million to 92.5 million US dollars mitigates this risk)
The risks of shrinking revenues in the wake of the possible quality deterioration of the raw products supplied to the market and the efforts to curb prices of petroleum products in the domestic market are also putting pressure on the Company's rating.
Official Company name: OGP CJSC.
This press release is based on the Statement of assignment of a credit rating to OGP CJSC.
The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.
AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
CJSC Analysis, Consulting and Marketing 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) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.
CJSC AK&M Rating Agency
Ul. Gubkina 3, Moscow, Russia
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.