Moody's rates Tristan Oil note B2

Moody's Investors Service said it assigned a B2 corporate family rating to Tristan Oil Ltd. and a B2 rating to its six-year senior secured notes, which are guaranteed on a senior secured basis by Kazpolmunay and Tolkynneftegaz, by a pledge of 100% of the capital stock of Tristan Oil, Kazpolmunay and Tolkynneftegaz and by all notes payable to Tristan Oil by Kazpolmunay, Tolkynneftegaz and Tolkynneftegaz's parent company.

The outlook is stable.

The agency said the B2 rating reflects high risks to Tristan Oil's cash flow associated with the company' reliance on a concentrated number of field assets to support the level of debt; Kazpolmunay and Tolkynneftegaz have limited diversification, owning only two oil and gas fields; the company's small size; the risks associated with a concentrated ownership structure; potential export route constraints and reliance upon third-party transportation systems; and the challenging environment of operating in Kazakhstan, characterized by significant political, legal, fiscal and exchange rate risks.

In assigning its ratings, Moody's also recognized the company's low-cost structure and beneficial geology; the demonstrated operational efficiency highlighted by the ability to grow reserves, production and sales over recent years; the good level of developed reserves, which minimize the need for additional sizeable investment over the short term; and the good level of profitability on the back of high oil and gas prices over the recent period.

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