Moody’s rates Aker BP Ba2, notes Ba3

Moody's Investors Service said it assigned Aker BP ASA a Ba2 corporate family rating, Ba2-PD probability of default rating and a provisional Ba3 rating to the proposed $500 million senior unsecured notes due 2022.

The outlook is stable.

Moody’s said the assignment of a Ba2 corporate family rating reflects Aker BP's: (a) Strong financial profile with EBITDA margin expected to be maintained above 70% and gross adjusted debt/EBITDA to remain in the range of 1.5 times to 2 times in 2017-2018 assuming an oil price in the middle of the range of $40-60/bbl; (b) good liquidity profile with cash balance of $174 million (excluding restricted cash of $9 million) and $1.9 billion of availability under its reserve based lending facility as of March 31; and (c) strong presence as a mid-sized E&P operator in the Norwegian Continental Shelf supported by a low cost profile with opex cost expected at $11/bbl in 2017 and a stable operating environment in Norway (Aaa, stable).

In addition, the assignment reflects the company’s: (a) Exposure to a supportive tax regime in NCS including possible cash refunds on the non-depreciated tax balances from the government if petroleum activities cease; (b) ownership structure with two strong shareholders Aker ASA (unrated) and BP plc (A1, positive) from whom support could be derived in case of need; and (c) strong upside growth potential after the start-up of Johan Sverdrup project, in which Aker BP retains a 11.6% interest, currently expected in the fourth quarter of 2019.

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