Press Release

JCR-VIS Reaffirms Entity Ratings of Oil and Gas Development Company Limited at AAA/A-1+

Karachi, April 8, 2010: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Oil and Gas Development Company Limited (OGDCL) at ‘AAA/A-1+’ (Triple A/A One Plus). Outlook on the medium to long-term rating is ‘Stable’.

The ratings incorporate GOP’s principal shareholding in OGDCL, which is otherwise the largest producer of oil & gas in the country. The company’s inherently low business risk is manifested by the strategic importance of oil & gas in national development which has made its consumption indispensable. Moreover, the inadequate local reserves inflict heavy burden on the national exchequer in the shape of import bill. Amidst this situation, the demand for locally produced oil & gas remains robust.

OGDCL has shown sustainable growth in business volume over the years. The strong financial profile of the company can be established from the fact that despite significant capital expenditure requirement in the E&P sector, there has been no gearing on books. Healthy margins and sufficient cash flow generation enables the company to meet its expenditure requirements indigenously. However, the prevailing inter-corporate debt crisis in the industry is negatively impacting OGDCL as well. The government, besides confirming the recoverability of the debt to the company, is taking initiatives to overcome this issue and certain amounts are being settled at intervals. Nevertheless, if the trend persists, the company may face liquidity concerns triggering borrowing requirement, which will in turn affect the company’s financial risk profile.

One of the company’s largest gas reserves at Qadirpur is gradually depleting and can face further decline in production, going forward. In order to maintain current production levels, it is necessary to install compressors, which will extend the existing output till 2012. With the assistance of Sui Northern Gas Pipelines Limited, OGDCL is in the process of installing these compressors. Timely installation and commissioning of the compressors at Qadirpur field is crucial to ensure a plateau rate production level.

For further information on this rating announcement, please contact Ms. Sabeen Saleem (Ext: 510) at 021-5311861-70; fax to 021-5311872-73 or Mr. Maimoon Rasheed at 042-36610681-4.

Javed Callea

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2010 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited