RPT-Fitch affirms Russia's Eurasia Drilling Company at 'BB', outlook stable
May 24 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has affirmed Eurasia Drilling Company Limited's (EDC) Long-term foreign currency Issuer Default Ratings (IDR) at 'BB' with a Stable Outlook. Fitch also affirmed the 'BB' senior unsecured ratings of the RUB5bn domestic bonds due in 2018 issued by EDC's fully owned subsidiary OOO Burovaya Kompaniya Eurasia and USD600m Eurobond due in 2020 issued by its fully owned subsidiary EDC Finance Limited. A full list of ratings actions on EDC is at the end of this release.
EDC is the largest oilfield drilling company in Russia with a strong operational and financial profile. Fitch believes that EDC will continue to benefit from a favourable business environment as high oil prices enable Russian oil companies to finance their upstream capex including exploration and production drilling. We expect that EDC will maintain strong credit metrics in 2013-2016, i.e., funds from operations (FFO) gross leverage of below 1.75x and FFO interest coverage of above 10x. The company's ratings are currently constrained by high customer concentration and limited geographical diversification beyond Russia.
KEY RATING DRIVERS
Russia's Largest Drilling Company:
EDC is the largest oilfield drilling company in Russia with a market share of 29% in 2012 (by metres drilled, excluding offshore drilling). It operates mostly in Russia's Western Siberia, Volga-Urals, Timan Pechora and Eastern Siberia regions and is predominantly involved in onshore drilling, although it has begun to diversify geographically and stepped up offshore drilling operations. Nonetheless, the company's operational scale remains limited compared to that of larger, global oilfield services companies, such as Halliburton Company ('A-'/Stable) and Nabors Industries Inc. (Nabors, 'BBB'/Stable).