Moody's announces completion of a periodic review of ratings of Saka Energi Indonesia (P.T.)

(Singapore, April 11, 2019) -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Saka Energi Indonesia (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.

Saka Energi Indonesia (P.T.)'s Ba2 corporate family rating incorporates three notches of uplift, which reflects our expectation that its parent Perusahaan Gas Negara (P.T.) (PGN, Baa2 stable) will provide financial support in a distressed situation. Saka is wholly owned by PGN, which is in turn 56.96% owned by national oil company Pertamina (Persero) (P.T.) (Pertamina, Baa2 stable). Saka remains strategically important to PGN given its position as the only upstream subsidiary and the close operational linkages between the two companies. The cross-default clauses between the two entities would also expose PGN to high reputational risk should Saka default.

Saka's fundamental credit profile reflects its good cash flow visibility from long-term fixed-price gas sales contracts, low operating costs and a good liquidity profile. At the same time, it has a small operating scale which is under pressure as production and hydrocarbon reserves decline, weak credit metrics and exposure to geographical concentration risk.

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)