Moody’s ups Medco Energi, view to stable

Moody’s Investors Service said it upgraded the corporate family rating of Medco Energi Internasional Tbk. to B1 from B2. Moody’s also upgraded the ratings on the backed senior unsecured bonds issued by Medco Strait Services Pte. Ltd., Medco Platinum Road Pte. Ltd. and Medco Oak Tree Pte. Ltd. to B1 from B2. These bonds are guaranteed by Medco.

“The rating upgrade reflects a sustained improvement in Medco’s scale and the geographic diversification of its reserves and production, following the acquisition of Ophir,” said Vikas Halan, a Moody’s senior vice president and lead analyst for Medco, in a press release.

Pro forma for Ophir acquisition, Medco expects to produce 110 thousand barrels of oil equivalent per day in 2019, up from 87 thousand boe per day in 2017. Also, Medco’s proved reserves has increased to 249.3 million boe at Sept. 30 from 233.5 million boe at the end of 2017.

“Medco’s credit metrics and liquidity are also supportive of its B1 rating. We expect the company’s debt/EBITDA to improve to below 4x in 2019 from 4.4x in 2018. This is despite the increase in its debt to fund the acquisition of Ophir Energy in 2019,” Halan said.

The agency changed the outlook to stable from positive.

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