Fitch rates KazMunaiGas EP BBB-

Fitch Ratings said it assigned BBB- long-term foreign- and local-currency issuer default ratings and an F3 short-term issuer default rating to JSC KazMunaiGas Exploration Production.

The outlook is stable.

The agency said the ratings reflect KazMunaiGas EP's sound credit metrics, as demonstrated by its low leverage and high profitability, and the advantages it receives through its parent company, JSC NC KazMunaiGaz. KazMunaiGas EP has a first right of refusal on acquisitions of existing and new oil and gas projects in Kazakhstan. Exercising this right, the company has expanded its production and reserve base through an acquisition of a 50% stake in JV Kazgermunai and a 50% stake in Citic Canada Energy Ltd. developing the Karazhanbas field.

The ratings also consider the fact that KazMunaiGas EP operates mature fields with declining production and high costs and the challenges the company faces to replace reserves, Fitch said.

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