has affirmed Hunt Oil Company of Peru L.L.C., Sucursal del Peru's (HOCP) Long-Term Foreign and Local Currency (FC/LC) Issuer Default Ratings (IDRs) at 'BBB'. The Rating Outlook is Stable.
Likewise, the credit rating agency has affirmed HOCP's US$600 million senior unsecured notes due 2028 at 'BBB'.
HOCP's ratings reflect the company's solid capital structure reflected in its moderate leverage and sound credit metrics.
According to Fitch, the ratings also reflect the company's manageable capex investment plan required to maintain the reserve life of Blocks 88 and 56 due to the nature of the fields and amounts invested in the past.
"The ample reserve life of Camisea's Blocks 88 and 56, and steady production levels at a relatively low production cost compared with its Latin American peers, support the company's strong cash flow generation," Fitch said.
"This, coupled with a conservative capital structure and adequate liquidity, has allowed the company to satisfactorily navigate the downturn of the energy prices cycle, combined with lower demand from the coronavirus pandemic," it added.
HOCP's growth strategy and associated capital investment are considered moderate and Fitch expects HOCP to maintain a financial and credit profile consistent with the assigned rating.
Furthermore, HOCP's ratings are supported by Camisea's strategic importance for Peru (IDR: BBB+/Stable) as it provides 85% of the country's natural gas supply, 40% of the effective power of the electrical interconnected system (SEIN) and 92% of the country's thermal power.
The ratings also reflect the long-term license agreements expiring in 2040 and 2044 for blocks 88 and 56 and the large reserve base of Camisea estimated at 13 trillion cubic feet (TCF) of NG and 517MMbl of natural gas liquids (NGLs) by the Peruvian ministry of energy and mines (7.8 TCF if considering only the life of the license agreement for blocks 88 and 56 reported by HOCP). Political risk is considered low given the importance of Camisea for the country.