Moody’s says Kashagan move credit-negative for ONGC
Conversely, the sale would be ‘credit-positive’ for ConocoPhillips as it would plug the firm's cash-flow gaps and help fund its large capital programme, Moody's said. The deal would also enhancing the firm's liquidity and allow it to maintain its solid leverage profile.
Moody's, which a day earlier reaffirmed stable outlook for India, said: “ONGC has been struggling to generate positive free cash flows given its already high capital expenditure program (approximately $7.5 billion for the year ended March 2012).”
It added: “Additionally, ONGC’s share of India’s high fuel subsidy was $10 billion for the fiscal year ended 31 March, and we expect it to rise to $12 billion this fiscal year. For the 12 months ended 31 March, ONGC generated free cash flow of $145 million and had $3.2 billion of debt and nearly $5 billion of cash.”
It said: “We expect ONGC to increase its net borrowings by approximately $5 billion to fund this acquisition. The companies expect the acquisition, subject to relevant regulatory approvals, priority rights and consortium preemption rights, to close in the first half of 2013.”
The oil and gas major has formulated a “Perspective Plan – 2030,” whereby it plans
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