Moody's rates International Petroleum, notes B1

Moody's Investors Service said it assigned International Petroleum Corp. a B1 corporate family rating, a B1-PD probability of default rating and a B1 rating to its planned $300 million of guaranteed senior unsecured notes due 2026.

“International Petroleum Corp.'s (IPC) B1 corporate family rating (CFR) reflects its: (1) relatively good reserve profile with about 118 mmboe 1P developed (1PD) reserves and a net reserve life of about seven years; (2) low capex requirements of about $4-$5 per barrel to broadly replace depleting reserves; (3) a strong track record of increasing its daily production through acquisitions and capex optimization; (4) healthy balance sheet with EP debt/avg. daily production of about $6,800 and debt/EBITDA of 0.9x for the end of 2021 pro forma for the proposed issuance of a $300 million bond; (5) strong free cash flow generation under our base case (Brent at $68 in 2021 and $65 in 2022) and (6) a sound liquidity profile,” the agency said in a press release.

However, these strengths are balanced by the company’s modest scale and diversification with about 41k boe/d of oil production (net of royalties) from its assets in Canada, France and Malaysia in 2020 and its relatively mature oil and gas assets, which will it make difficult to raise production meaningfully without acquisitions or material capex investments among other factors, Moody’s noted.

The proceeds will be used to repay debt, which was $183 million as of Sept. 30, and for general corporate purposes.

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