Muscat – S&P Global Ratings on Tuesday upgraded the long-term issuer credit rating and issue ratings on Energy Development Oman (EDO) and its debt to BBB- from BB+ and assigned the company a stable outlook.

The rating action on EDO follows S&P’s similar ratings upgrade of the Omani government on Friday. S&P upgraded Oman’s sovereign ratings to BBB- from BB+ to reflect the continued strengthening of the government’s balance sheet and the faster-than-expected external deleveraging of many state-owned enterprises.

‘Given EDO’s integral link with the government and our belief that the government can influence the company’s strategic plans through its significant representation on EDO’s board, the upgrade of EDO mirrors that of the sovereign. Our issuer credit rating on EDO is now in line with our ‘bbb-‘ assessment of the company’s stand-alone credit profile (SACP),’ S&P said in its rating action commentary.

‘We also incorporate our view that EDO plays a very important role for the Omani government, as it is the largest oil and gas producer in Oman – through its 60% ownership of Petroleum Development Oman – and thus a significant employer,’ the agency noted. It added that this reflects the high default correlation between the government and EDO, resulting from the concentration of hydrocarbon receipts in the government’s revenue.

S&P said that its stable outlook on EDO mirrors that of the sovereign and is based on expectations that EDO will continue to benefit from its leading share in Oman’s oil and gas production while maintaining its ability to replace reserves and operate profitably, even in a low oil price environment.

EDO was established in December 2020 through a royal decree and is wholly owned by the Omani government. In 2021, the government transferred its 60% stake in the Block 6 oil concession, through its ownership in PDO, to EDO and granted it 100% of the new Block 6 gas concession.

© Apex Press and Publishing Provided by SyndiGate Media Inc. (Syndigate.info).