Fitch Ratings has affirmed
The Rating Outlook is Stable. Concurrently, Fitch has withdrawn the ratings.
The affirmation reflects CGC's businesses profiles that have proved to be resilient, over the years, to a deteriorating macroeconomic environment plagued with inflation and devaluation of the local currency. The company has maintained its adequate leverage profile, liquidity, of which a large portion is held in USD abroad, combined with exports that help mitigate the impact of capital controls.
The ratings were withdrawn for commercial reasons.
Key Rating Drivers
Weak Operating Environment: CGC's ratings are capped by the country ceiling of
Production Profile: CGC's production is projected to reached 60,000boed in 2023. As of end of
Stable Cash Flow Profile: Fitch's rating case estimates FCF will be negative in 2023 as the company deploys
Transitory High Leverage: CGC's gross leverage is expected to be close to 4.0x in 2023, and then descend below 3.0x by 2026. Total debt to 1P is expected to be USD7boe in 2023, as the company finances most of its Austral and
Derivation Summary
CGC's (B-/Stable) credit profile compares favorably to Argentine corporates
CGC is an energy company, and its business profile compares mostly to Capex and Pampa's upstream business, but both Capex and Pampa are diversified energy companies that generate majority of cash flows from power generation, thus they are more exposed to CAMMESA. Both Pampa and CGC are leaders in
CGC produces both oil (38%) and gas (62%) exclusively in
Key Assumptions
Operations
Oil and gas production to average 63,000 boe/d over the next four years;
Average realized natural gas price of
Average realized Brent price of USD76bbl in 2023, USD71bbl in 2024, and USD55bbl long term;
Capex of
Lifting cost (COGS - D&A) of
Selling expenses are
SG&A expenses are
Exploration expense are
Reserve replacement ratio of 105% per annum.
Financial:
Fitch Average and EOP ARS/USD exchange rates;
Dividends received of
Dividends paid of
Debt outstanding remains at or below
RATING SENSITIVITIES
Rating sensitivities are not applicable as the ratings have been withdrawn.
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
Liquidity and Debt Structure
Adequate Liquidity: CGC reported
Issuer Profile
CGC is an energy company with operations in
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
CGC has an ESG Relevance Score of '4' for GHG Emissions & Air Quality due to the growing importance of policies designed to limit the greenhouse gas (GHG) emissions from the production of oil and gas and potentially lessening demand, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
Following the withdrawal of ratings for CGC Fitch will no longer be providing the associated ESG Relevance Scores.
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