Moody's announces completion of a periodic review of ratings of Medco Energi Internasional Tbk (P.T.)

(Singapore, April 11, 2019) -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Medco Energi Internasional Tbk (P.T.) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Key rating considerations are summarized below.

Medco Energi Internasional Tbk. (P.T.)'s B2 corporate family rating is supported by its modest but improving scale of reserves and production, and a degree of revenue visibility from long-term fixed-price gas sales agreements for around 30% of its total volumes over the next two to three years. The rating also reflects our expectations that Medco will continue to deleverage over the next few quarters. Despite an increase in its absolute debt level to fund the acquisition of Ophir Energy plc., Medco's credit metrics will improve on the back of operating cash flow generation from Ophir's portfolio once the transaction is complete, as well as the sale of non-core assets.

At the same time, the rating is constrained by Medco's exposure to the cyclical nature of oil prices, execution risks associated with its investment plan and its acquisitive growth appetite.

This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.

The principal methodology used for this review was Independent Exploration and Production Industry published in May 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology. (ends)