S&P affirms B+ rating on Medco

S&P affirms B+ rating on Medco

MELBOURNE: Standard & Poor's said on Wednesday it has affirmed its 'B+' corporate credit rating on Indonesian upstream oil and gas company, P.T. Medco Energi Internasional Tbk. (Medco). The outlook is stable.

The rating on Medco reflects the company's short proved reserves life of 4.9 years, which explains the company's aggressive push to acquire producing oil blocks in 2003 to immediately add to its proved reserves base and production volumes.

The rating on Medco also reflects the company's favorable cost structure and production track record.

The large size of Medco's operating areas, low labor costs, and proximity to oil and gas supply infrastructure contribute to its better-than-average cost structure.

Lifting cost in 2002 was US$2.86 per barrel of oil equivalent (boe), compared with the global average of $4-$5 per boe. The company also has moderate, although increasingly aggressive, debt leverage and strong credit measures. -- Dow Jones