Find A Rating 
PRESS RELEASES
RAM Ratings affirms PETROS’ rating at AAA/Stable
Published on 24 Oct 2024.
RAM Ratings has affirmed Petroleum Sarawak Berhad’s (PETROS or the Group) AAA/Stable/P1 corporate credit ratings. We have also affirmed the AAA/Stable rating of the Multi-Currency Islamic Medium-Term Notes of up to RM15 billion (2021/2051) issued by PETROS’s wholly owned subsidiary, Petroleum Sarawak Exploration & Production Sdn Bhd.
The ratings reflect Sarawak’s robust State Implicit Strength, acknowledging the Group’s strategic role in developing the state’s oil and gas sector. As petroleum sales tax and royalties constitute a substantial portion of the Sarawak government’s revenue, we expect PETROS to continue to receive regulatory support and financial support from the state government as needed. Effective 1 February 2024, PETROS was appointed the sole gas aggregator for Sarawak. This transition grants PETROS full oversight of natural gas procurement and distribution within the state, further strengthening its position in Sarawak’s energy landscape.
The strategic shift is expected to enhance Sarawak’s control over its natural resources and generate a stable revenue stream for PETROS, while aligning with the state’s long-term energy objectives, including the target of increasing domestic gas usage from the current 6% to 30% by 2030. PETROS was initially set to commence its operational duties in this role on 1 October 2024, but discussions on the terms of the implementation remain ongoing.
For FY Dec 2023, PETROS reported a significant increase in revenue and pre-tax profit, which reached RM4.0 billion and RM1.5 billion, respectively, compared to RM1.8 billion and RM0.8 billion a year earlier. Growth was driven by strong cash flows from the Group’s five farmed-in Production Sharing Contracts and the recovery of commodity prices during the second half of fiscal 2023. However, due to lower commodity prices in the first half of fiscal 2024, revenue declined slightly to RM2.0 billion from RM2.1 billion in the same period of fiscal 2023.
The Group’s liquidity remains robust, with cash and cash equivalents totalling RM1.5 billion as of end-June 2024. Gearing held steady at 2.56 times despite a RM1.5 billion sukuk issuance in May this year, in view of increased retained earnings. Proceeds from this issuance will fund key projects including a gas pipeline connecting Samalaju to Bintulu, and the Miri Combined Cycle Gas Turbine power plant. Both projects are expected to commence operations by the end of 2025 and 2026, respectively, with projected capital expenditures of up to RM3 billion. On the back of a heavier debt load, PETROS’s debt to operating profit before depreciation, interest and tax – another measure of leverage – rose to 2.61 times as at end-June 2024 (end-June 2023: 1.64 times) while funds from operations debt coverage declined to 0.35 times (end-June 2023: 0.53 times). These financial metrics are still viewed to be healthy as debt coverage ratios are anticipated to stay stable in the near term, barring further acquisitions and prolonged commodity price weakness.
Analytical contacts
Darrel Tiang
(603) 3385 2531
darrel@ram.com.my
Thong Mun Wai
(603) 3385 2522
munwai@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2024 by RAM Rating Services Berhad
