(The following statement was released by the rating agency)
Dec 06 -
Summary analysis -- Alliance Oil Co. Ltd. ------------------------- 06-Dec-2012
CREDIT RATING: B+/Stable/-- Country: Russia
Primary SIC: Oil and gas
Mult. CUSIP6: 018760
Credit Rating History:
Local currency Foreign currency
10-Feb-2010 B+/-- B+/--
The ratings on Russia-based crude oil and oil products producer Alliance Oil Co. Ltd. (Alliance) reflect Standard & Poor’s Ratings Services’ view of the company’s “weak” business risk profile and “aggressive” financial risk profile, according to our criteria.
In our view, the key constraint on Alliance’s rating comes from the company’s large expected capital expenditure needs, which we anticipate will lead to considerably negative free operating cash flow (FOCF). We believe that this, together with the recent acquisition of gas assets in Tomsk for $128 million, will increase the company’s debt and may reduce its headroom under the covenants. We understand that the company is working on a number of options to address this risk.