Press Releases / 23.10.2015
Press Release as of 23.10.2015
«BerezkaGaz Ob» JSC
AK&M Rating Agency affirmed the national scale credit rating of BerozkaGaz Ob JSC at 'A', tier 3, with a stable outlook.
The 'A' rating indicates that the Company is highly creditworthy. The risk of a failure to meet obligations in time is low, the full or partial debt restructuring risk is minimal. The rating assignment was based on the Credit Rating Methodology for Corporates (Issuers) and Financial Assets rev. January 23, 2014 including the amendments approved by the Methodology Committee on February 18, 2015).
BerozkaGaz Ob Joint Stock Company (previous name: ObGasProcessing / OGP CJSC) positions itself in the market as a company specializing in the efficient utilization of associated petroleum gases extracted at the Prirazlomnoye oil and gas field in Khanty-Mansi autonomous area - Yugra.
The credit rating of BerozkaGaz Ob JSC is supported by the high technology level and environmental commitment of the project implemented by the Company, the successfully completed construction of a gas reciprocating power plant and the commencement of electricity generation; the substantial undrawn balances of the opened credit lines / loans, the strong liquidity position and the comfortable debt profile.
The operation of an APG processing unit at Prirazlomnoye, the core element of BerezkaGaz Ob's business, contributes to the environmental program of Khanty-Mansi autonomous area – Yugra which assumes increasing the effective APG utilization percentage level in the region to 98-99% in the near future. Today's effective APG utilization level reaches 95%. This ensures a favorable administrative environment for the Company's current operations and offers further business development opportunities for BerozkaGaz Ob JSC in the region.
The commissioning of a gas reciprocating power plant in November 2015 will enable the Company increase the utilization efficiency of dry stripped gas (which was flared before the commencement of electricity generation), to boost its industrial and financial performance (the company's revenue is projected to increase by RUB 550 million per year on average). The electricity produced will be sold to LLC RN-Yuganskneftegaz, a subsidiary of Rosneft Oil Company, the power plant is expected to operate at full capacity. The anticipated steady business profits will enable BerezkaGaz Ob to quickly cover the accumulated losses and to increase the cash flow from operations.
The funds provided to the Company in long-term credit lines (which are not yet fully drawn) are more than enough to preserve the creditworthiness of BerozkaGaz Ob JSC over the forthcoming 12-month period. In particular, the undrawn credit balance of only two effective loan agreements exceeds RUB 3.5 billion.
The strong current liquidity position contributes to the credit rating of BerezkaGaz Ob; at the start of the second half of 2015, the Company's current liquidity ratio reached 2.28.
One of the key positive rating drivers for BerezkaGaz Ob is its comfortable debt profile. The Company's debt is wholly composed of long-term loans, most of which mature between 2020 and 2030. The first loan to be completely repaid matures in April 2017.
We regard the loss from current operations due to exchange rate differences, the high amount of long-term debt and the uncertainty as regards the future ruble vs. dollar and Euro movements in 2016 as the rating constraints.
So far, BerozkaGaz Ob JSC continues to generate losses (mainly due to the substantial impact of negative exchange rate differences, given that the financing for the APG processing unit construction project was wholly denominated in US dollars). Net loss from the Company's activity for H1 2015 was RUB 38 million. This, coupled with the losses accumulated in previous years, resulted in the growth of negative capitalization of BerezkaGaz Ob JSC, which is putting pressure on the credit rating.
Another major rating constraints is the higher loan debt which increased by 5.7% in January-June 2015, exceeding the RUB 6.8 billion mark. The debt growth resulted from the current revaluation of the foreign currency-denominated component of the Company's debt in the context of a weaker ruble and the drawdown of the credit lines opened for the gas reciprocating power plant construction this year (the principal repayment on these lines starts in 2016).
One of the risk factors negatively affecting the Company's activity is the continued Russian ruble depreciation against the Euro and the US dollar as well as the uncertainty as to its future movements in 2016. The weaker ruble pushes up the amount of interest payments resulting in a stronger debt burden, given that a large part of the loans provided to BerozkaGaz Ob JSC were denominated in foreign currencies.
BerozkaGaz Ob JSC (previous name: ObGasProcessing / OGP CJSC) was founded in October 2008 to implement a pilot project of its parent company (MONOLIT LLC, later rebranded as BlueLine Project LLC, then as BerozkaGas Company) in Khanty-Mansi autonomous area - Yugra. The aim of the project was 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.
With the aim of further business development, a decision was made on the construction and subsequent operation of another production facility, namely, a gas reciprocating power plant. A €12.7 million loan was taken out from Gazprombank to finance the purchase of equipment for the power plant.
The APG processing unit at Prirazlomnoye has been in operation since 2011, the gas reciprocating power plant is to be commissioned in late October 2015.
Full Company name: "BerozkaGaz Ob" Joint Stock Company
Short name: "BerozkaGaz Ob" JSC
Location: Tobolsky Trakt 4, Khanty-Mansiysk, Khanty-Mansi autonomous area - Yugra, Tyumen region, 628011 Russia
As of July 1, 2015, assets of BerezkaGaz Ob JSC amounted to RUB 5.04 billion, the authorized capital was RUB 1 million. The Company's reports are audited by MICROPOL-CONSULTING LTD.
AK&M Rating Agency assigned a credit rating to BerezkaGaz Ob JSC for the first time on October 26, 2012. The last rating action in relation to the Company was taken on November 13, 2014. All rating action announcements are available on the akmrating.ru website.
The rating is valid until October 2016. AK&M Rating Agency may revise the rating and/or the outlook during this period if circumstances fundamentally influencing the Company's creditworthiness are revealed.
For estimation purposes, we completely rely on the reliability of information provided by the Company. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.
This press release refers to the Statement of assignment of a credit rating to BerozkaGaz Ob JSC based on the Credit Rating Methodology for Corporates (Issuers) and Financial Assets rev. January 23, 2014 including the amendments approved by the Methodology Committee on February 18, 2015). A deviation was made from the rating methodology towards a higher rating, seeing as BerozkaGaz Ob JSC is on the verge of substantially improving its financial position as the Company is expected to start generating profits at the end of the third quarter of 2015. Besides, we appreciated the sufficiency of undrawn balances of long-term credit lines opened in favor of the Company for serving the debt of BerozkaGaz Ob JSC over the forthcoming 12-month period.
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.
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) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.
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