Fitch affirms Eurasia Drilling

Fitch Ratings said it affirmed Eurasia Drilling Co. Ltd.'s long-term foreign-currency issuer default rating at BB with a stable outlook.

Fitch said it also affirmed the senior rating of the RUB 5 billion 8.4% bonds due in 2018 issued by OOO Burovoya Kompaniya Eurasia, a wholly owned indirect subsidiary, at BB.

The company's ratings reflect its position as the largest drilling company in Russia, its strong operational profile, a more modern rig fleet compared to that of its Russian peers and long-term relationships with its largest customer, OAO Lukoil (BBB-/stable), according to the agency.

The ratings also reflect the company's strong financial profile, solid operating profit margins, strong operating cash flows and a debt profile that is commensurate with the rating level, the agency noted.

Fitch said it expects the company to maintain funds-from-operations adjusted gross leverage under 1.5x in 2011 to 2015, which is commensurate with the BB rating level. The ratings are constrained by the company's small size relative to international peers, its concentration in onshore drilling in Russia and significant future capital requirements for its rig fleet modernization, the agency noted.

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