BAKU, Azerbaijan, Sept.5. Moody's expects Azerbaijan’s state oil company SOCAR to sustain its positive free cash flow (FCF) over the next 12-18 months, although the size of that depends on the company's execution of its capital spending program, oil and gas market conditions, and the shareholder's strategic decisions, Trend reports.
“The company recorded free cash flow (FCF) of AZN2.6 billion in 2021 and AZN6.8 billion in 2022 after negative cash generation in 2019-20. The recommendation also reflects the improvement in SOCAR's credit metrics. Its leverage reduced to 1.5x in 2022 from 3.4x in 2021 and 4.9x average in 2017-20, and is likely to remain around this level over the next two years. Moody's-adjusted EBIT/Interest expense improved to 7.6x in 2022 from 3.7x in 2021, 0.8x in 2020 and around 3.0x in 2017-19. Moody's expects interest coverage to remain solid at 5.0x-6.0x in 2023-24,” said Moody’s.
The rating agency notes that the company's liquidity also improved.
“Its cash balance of 12.5 billion manat as of year-end 2022 and forecasted cash generation of around 4 billion-5 billion manat over 2023-24 will be sufficient to cover estimated debt maturities of AZN11.2 billion over this period,” said Moody’s.
SOCAR is engaged in exploration of oil and gas fields, the production, processing and transportation of oil, gas and gas condensate, the sale of oil and petrochemicals in the domestic and international markets, the supply of natural gas to industrial enterprises and the population of Azerbaijan, as well as Europe.
The company conducts various activities in countries such as Türkiye, Georgia, Romania, Switzerland, Germany and Ukraine, including trading activities mainly in Switzerland, Singapore and Nigeria.
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