S&P: Austria-Registered Oilfield Services Company C.A.T. oil AG Affirmed At 'B+/B' On Financial Flexibility; Outlook Stable
MOSCOW (Standard & Poor's) March 24, 2009--Standard & Poor's Ratings Services said today that it had affirmed its 'B+' long-term and 'B' short-term corporate credit ratings on C.A.T. oil AG, an Austria-registered oilfield services company that conducts all of its operations in the Russian Federation (foreign currency BBB/Negative/A-3; local currency BBB+/Negative/A-2; Russia national scale 'ruAAA') and the Republic of Kazakhstan (foreign currency BBB-/Negative/A-3; local currency BBB/Negative/A-3; Kazakhstan national scale 'kzAAA'). At the same time, the 'ruA+' Russia national scale rating was affirmed. The outlook is stable.
"The affirmation reflects C.A.T. oil's significant financial flexibility and conservative policies, which should offset, in our view, weakening conditions in the Russian oilfield services (OFS) industry," said Standard & Poor's credit analyst Andrey Nikolaev.
The ratings are constrained by worsening conditions in the Russian OFS industry caused by lower hydrocarbon prices, the intrinsic cyclicality and competitiveness of the OFS industry, for which barriers to entry are low; the company's small scale, which limits its pricing power and diversity; and the risks inherent in operating in Russia.
These constraints are partly offset by C.A.T. oil's strong niche positions in hydraulic fracturing (hydrofracturing) and sidetracking, which should be more resilient to the current downturn than some other segments of the OFS industry, such as seismic surveys and development drilling, because hydrofracturing and sidetracking mainly support production in existing fields. The ratings are supported by C.A.T. oil's currently low leverage, adequate corporate-governance practices and transparency, moderate financial policy, and adequate liquidity.
C.A.T. oil's short-term debt is €6, covered by cash reserves of €14 million.
"The outlook is stable because we expect the impact of substantially weaker market conditions to be offset by the company's change in operating strategy and minimal debt," said Mr. Nikolaev. Moreover, we believe the company will generate positive FOCF even during the current downturn.
Negative rating actions could ensue if C.A.T. oil is unable to benefit from its current competitive advantages due to its modern fleet and solid order book to ensure high capacity utilization throughout 2009, or if customers' stronger bargaining power leads to major working-capital outflow. Abandoning its conservative investment and financial policy to pursue lucrative opportunities in the Russian OFS market could endanger the ratings and outlook.
Ratings upside is unlikely in the near term in light of C.A.T. oil's limited diversity and the unfavorable nature of the OFS market.
http://www.cbonds.info/all/eng/news/index.phtml/params/id/427745
Thread abonnieren
