PEFINDO has affirmed its idAA- ratings to PT Medco Energi Internasional

(April 4, 2024)--PEFINDO has affirmed its idAA- ratings to PT Medco Energi Internasional Tbk (MEDC) and its outstanding bonds. Outlook for the corporate rating is stable. The rating reflects MEDC’s diversified assets, high proportion of revenue from gas with fixed prices that contributes to cash flow visibility, and good operating management. The rating is constrained by its moderate financial profile and inherent risks related to the commodity-based sectors and exposure to energy transition risk.

The rating may be raised if the Company’s continuous deleveraging efforts will result in a conservative financial profile. This should be bolstered by the endeavor to improve its reserve life while maintaining financial leverage (excluding power segment) at below 2x.

The rating may be lowered if it incurs higher than projected debt without being compensated by a stronger business profile, which may weaken its financial profile on a sustained basis. The rating may also be under pressure if commodity prices are significantly below our anticipation, which may adversely affect its revenue and profitability.

MEDC is a publicly listed, integrated energy and natural resources company, with three main businesses in its core business of oil and gas exploration and production (E&P) activities in Indonesia, the Middle East, North Africa, and Southeast Asia; power generation; and mining. In 2023, 72.4% of its revenue was generated from oil and gas, followed by trading (14.8%), power business (12.5%), and others (0.3%). At the end of 2023, its shareholders consisted of PT Medco Daya Abadi Lestari (51.72%), Diamond Bridge Pte Ltd (21.56%), PT Kalibiru Lestari Bersama (2.64%), PT Medco Duta (0.12%), management (1.32%), and the public (22.64%). (ends)