The Pakistan Credit Rating Agency Limited
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PACRA Upgrades Entity Ratings of Spud Energy Pty Limited (Pakistan Branch)

Rating Type Entity
(15-Jan-21 )
(15-Jan-20 )
Action Upgrade Maintain
Long Term A A-
Short Term A1 A2
Outlook Stable Stable
Rating Watch - -

Spud Energy Pty Limited (Pakistan Branch) is engaged in upstream Oil and Gas business in Pakistan. The company is a wholly owned subsidiary of Jura Energy Corporation, public company listed on TSX Venture Exchange. The Board of Jura Energy Corporation, comprising six members, exercise intensive oversight over the company. The control environment is considered a plus. The company has started reaping benefits since the production of Zarghun South Development and Production lease, augmenting its profitability considerably. There is high dependence on Zarghun field, which is alleviated by presence across different wells. This provides comfort to the ratings. The strength of the business reflects in the US dollar based pricing and its collection in US dollar directly into the foreign currency bank accounts. Spud Energy Pty Limited's (Pakistan Branch) management aims to sustain its existing portfolio as it aims to sustain - indeed improve - its volumes. In addition, the cash flow position is considered supportive. The company has a receivable from a group company, recovery of which is being worked out. The Head Office investments shows strength, which is expected to stay with the company.
The ratings are dependent on sustained competitive positioning of the company, while upholding good governance practices through its parent Company i.e. Jura Energy Corporation. Financial discipline is considered core to the ratings, with enduring emphasis on maintaining relevant coverage’s and fulfilling the debt covenants. Sustenance and improvement in the gas and condensate production would remain a key factor.

About the Entity
Spud Energy Pty Limited, a Company with limited liability, incorporated in Australia on May 2, 1996. Spud Energy operates in Pakistan through a branch office in Islamabad.

The BoD of Spud Energy Pty Limited comprises of three members. The decision making for Spud Energy Pty Limited is carried out by the parent company’s board i.e. Jura Energy Corporation which afterwards is disseminated downward to Spud Energy Pty Limited’s board. Jura Energy Corporation’s comprises of six members, out of which three are independent, two are non-executives and one is an executive director. The management team is led by Mr. Nadeem Farooq as Chief Executive Officer and Mr. Arif Siddiq as Chief Financial Officer. They are assisted by a small and competent team of industry professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.