Muscat – Global credit rating agency Fitch Ratings has affirmed Energy Development Oman’s (EDO) long-term issuer default rating (IDR) at ‘BB+’, with a positive outlook.

In a statement, Fitch said that EDO’s rating is constrained by that of the Government of Oman (BB+ with positive outlook), its sole shareholder, due to their close links. This is in line with Fitch’s Government-Related Entities (GRE) rating criteria and Parent and Subsidiary Linkage (PSL) rating criteria.

The positive outlook on EDO reflects that on Oman’s sovereign rating, the agency noted.

EDO’s ‘bbb+’ standalone credit profile (SCP), according to Fitch, is supported by its large-scale oil and gas operations, strong and resilient cash flow generation – underpinned by contracted sale prices for gas – and a flexible royalty framework and dividend policy, as well as low leverage.

‘The SCP is constrained by operations concentrated in a single country, a solely upstream-focused business model, and a mature reserve base with low proved reserve life compared with peers,’ Fitch said.

Fitch acknowledged that the oil and gas sector is a major part of the Omani economy, with EDO’s Block 6 concessions accounting for a significant share of the nation’s oil and gas reserves. The company sells gas mainly in the domestic market and is one of the largest corporate employers in Oman.

‘We expect EDO will maintain a strong financial profile until 2029 under our base-case oil and gas price deck, despite rising capital expenditure, and high royalties and tax payments to the government. Dividends are paid from excess cash flow after all debt servicing obligations and working capital requirements are met, while maintaining minimum cash levels, which allows cash flow flexibility,’ Fitch said.

The agency also noted that EDO continues to reduce greenhouse gas emissions from operations and flaring, alongside improving energy efficiency. ‘PDO aims to expand its renewable power generation capacity to up to 30% of capacity in the medium term. EDO’s and PDO’s environmental targets are in line with Middle Eastern peers, but they lag behind those of large European peers such as TotalEnergies, bp or Eni.’