The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Noor Ul Haq

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA maintains Entity Ratings of Spud Energy Pty Limited

Rating Type Entity
(13-Jan-23 )
(14-Jan-22 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Spud Energy Pty Limited (Pakistan Branch) is engaged in the upstream Oil and Gas business in Pakistan. The Company is a wholly-owned subsidiary of Jura Energy Corporation (JEC), a public company listed on TSX Venture Exchange. The Board of JEC, comprising of four members, duly exercise intensive oversight over the company. The ratings also take into account the strong governance structure and management control of the parent company. Spud Energy benefits from expertise of the parent company's board. The financial position of Spud Energy Pty Limited (Pakistan Branch) remains strong owing to its robust profitability in 9MCY22 and comfortable debt protection metrics. The strength of the business reflects in the US dollar-based pricing and its collection in US dollars directly into the foreign currency bank accounts. In addition to that the Company is least exposed to exchange loss risk where all transactions are US dollar-based. Hence, the Company earned an exchange gain of PKR~ 737mln which strengthened bottom line of the Company. Spud Energy Pty Limited's (Pakistan Branch) management aims to grow its exploration and production portfolio while simultaneously sustaining the existing producing infrastructure in place. The Company has a receivable from a related party, the recovery of which is being worked out. In the meanwhile, improving cash flows of the Company bode well for covering the outstanding debt amounts.
The ratings are dependent on the sustained competitive positioning of the Company, while upholding good governance practices through its parent company i.e. Jura Energy Corporation. Financial discipline is considered crucial to the ratings, with enduring emphasis on maintaining relevant coverages and fulfilment of debt covenants is being supplemented by improving revenues and healthy margins. Sustenance and development in the gas and condensate production would remain a key factor.

About the Entity
Spud Energy Pty Limited, a Company with limited liability, was incorporated in Australia on May 2, 1996. SEPL 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 afterward is disseminated downward to Spud Energy Pty Limited’s board. Jura Energy Corporation’s board comprises of four members, out of which two are independent, one is non-executive 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.