OREANDA-NEWS. RusRating has changed the outlook on Azen Oil Company B.V.’s credit rating, from “stable” to “negative”. This change reflects a fall in revenues linked to the lower price of oil plus a rise in the Company’s debt burden. The rating itself is unchanged at "BB+" on the international scale.

The rating is based on a strong operating margin, high return on investor capital, solid operating cash flow and the potential for financial support from the Company’s beneficiary owners.

Constraining factors include its relatively modest size, a lack of diversification by industry, dependence on a monopoly buyer (SOCAR, the State Oil Company of Azerbaijan) and a moderate debt burden.

Azen Oil Company is a Netherlands-registered firm controlled by Repleton Enterprises Limited (Cyprus), whose ultimate beneficiary is NK RussNeft (Russia). The Company has signed a production-sharing agreement with the government of Azerbaijan and SOCAR to exploit the Binagadi block, which includes the Binagadi, Girmaki, Chakhnaglar, Sulutepe, Masazyr, Fatmai, Shabandag and Syanshor fields; under the terms of the agreement Azen Oil has a 75% share of output. Geological reserves in the block total 130.9 million tonnes, of which 11.125 million tonnes are recoverable. Daily production is 398 tonnes (as of 01.01.2015).

The Company’s debt burden is moderate and its operating margin high, as is the return on investor capital. Fixed assets (oil wells and equipment) are the main component of the balance sheet. Risk sensitivity is low. Liquidity is sufficient.