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17

S&P Raised Ratings On Gas Producer Novatek

At the same time, the Russia national scale rating on NOVATEK was raised to...

Financial services company Standard & Poor's said today that it had raised its long-term corporate credit rating on Russia's largest independent natural gas producer NOVATEK to 'BB+' from 'BB'. The outlook is stable.

At the same time, the Russia national scale rating on NOVATEK was raised to 'ruAA+' from 'ruAA'.

"The upgrade reflects NOVATEK's very healthy credit metrics--despite ongoing large growth-oriented capital expenditures--and its high profitability, supported by the improving fundamentals of Russia's gas industry, a profitable condensate business, and efficient low-cost operations, said Standard & Poor's credit analyst Elena Anankina.

The upgrade also acknowledges NOVATEK's positive track record of cooperation with Russian gas giant Gazprom (BBB/Stable/--).

NOVATEK is responsible for only 4% of Russia's gas production and has a geographically concentrated reserve base. Its massive growth-oriented investment program is expected to result in negative free cash flow and increased debt in 2008-2009.