Forecasts on SOCAR’s capex until 2026 revealed

The aggregate capex of the State Oil Company of Azerbaijan (SOCAR) for 2022-2025 is expected at 16 billion manats ($9.411 billion), Report informs referring to the Fitch Ratings international rating agency.

“We expect deleveraging and completion of sizeable projects should add to visibility of its capex program which may lead to an upward revision of SOCAR's Standalone Credit Profile (SCP),” Fitch noted.

SOCAR’s cash balance was 9 billion manats ($5.294 billion) at end-2021 compared with 5.9 billion manats ($3.470 billion) of short-term debt. “We expect strong cash flow generation in 2022 and 2023 on the back of elevated oil and gas prices supporting SOCAR's liquidity.”

“While SOCAR's leverage has been historically relatively high compared with its peer group, we expect that funds from operations (FFO) net leverage metrics will decline from 2022 onwards.

This will reflect higher cash flow generation due to higher oil and gas prices as per Fitch's price deck. A record of maintaining FFO net leverage of below 4.0x coupled with satisfactory liquidity and improved financial transparency could lead to a positive reassessment of the SCP,” Fitch added.

The agency forecasts SOCAR’s annual dividend payment of 600 million manats ($352.941 million) over 2022-2025.