Moody's upgrades Sibneft

Moody's Investors Service said it upgraded OAO Siberian Oil Co.'s ("Sibneft") corporate family rating to Ba1 from Ba2 and the group's $500 million and $400 million loan participation notes to Ba2 from Ba3. This concludes Moody's review of Sibneft's ratings, which had been placed on review for possible upgrade on Sept. 28 following the sale of a 76% stake in the company to OJSC Gazprom.

The outlook is positive.

Moody's said the upgrade reflects Sibneft's strong fundamental performance and its recent acquisition by Gazprom, which currently holds 76% of the shares and therefore controls Sibneft's management and strategy. A further 20% is still owned by OAO Yukon, although it has been frozen by Russian courts as part of ongoing attempts by Russian tax authorities to recover back tax claims against Yukos.

Sibneft's ratings continue to reflect its sound cash generation, largely efficient operations and substantial financial flexibility from relatively low debt levels, the agency said.

Ratings are constrained by some field concentration, some ongoing uncertainty surrounding the integration and final structure of 50%-owned Slavneft (jointly owned with TNK-BP), the expectation of rising capital expenditure to support future production growth and cyclical exposure to volatile oil prices, Moody's said.

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