Moody’s alters Medco view to stable

Moody’s Investors Service said it changed the outlook for Medco Energi Internasional Tbk. and its subsidiaries Medco Platinum Road Pte. Ltd., Medco Oak Tree Pte. Ltd., Medco Bell Pte. Ltd. and Medco Laurel Tree Pte. Ltd. to stable from negative.

The outlook revision and affirmation of their B1 ratings follow Medco reporting it will buy ConocoPhillips Indonesia Holding Ltd. from a subsidiary of ConocoPhillips for $1.355 billion. CIHL indirectly owns a 54% interest in the Corridor Production Sharing Contract in Indonesia and a 35% interest in Transasia Pipeline Co. Pvt Ltd.

“The change in rating outlook to stable reflects our expectation that Medco will maintain very good liquidity and that its credit metrics will improve in 2022-23 because of strong earnings accretion from Corridor PSC, despite the debt-funded nature of the acquisition," said Hui Ting Sim, a Moody's analyst, in a press release.

The acquisition should boost Medco's proportion of gas in its production mix to 70%-75% from its current 60%-65%. The fixed-price portion of its production mix should also rise to 50%-55% from its current 33%-37%, Moody’s said.

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