• Home
• Oil & Gas
• News Article

Moody's assigns (P)Aa3 rating to Dolphin Energy Limited bonds and bank debt Up to USD 4.1 billion of debt affected

London, 15 July 2009 -- Moody's has today assigned a provisional (P)Aa3 rating to up to USD4.1 billion of 10-year amortising senior secured debt (the Senior Debt) due 2019 to be raised by Dolphin Energy Limited (DEL), a company incorporated in Abu Dhabi. The Senior Debt mainly comprises a bank debt facility, supplemented by bonds and USD1.2 billion of co-lending by the project's sponsors (Affiliate Debt). Up to USD400 million of the bank debt may be structured as a separate facility insured by SACE, Italy's Export Credit Agency; this debt would not be rated. The outlook on the rating is stable.

Moody's understands that the Senior Debt will be used mainly to refinance existing debt in the Dolphin project, an integrated gas production and distribution project to deliver gas from Qatar's North Field to customers principally in Abu Dhabi, Dubai and Oman, which commenced operation in July 2007. The project's sponsors are Mubadala Development Company PJSC (Mubadala, Aa2/stable), Total SA (Aa1/stable) and Occidental Petroleum Corporation (A2/stable). As Mubadala holds 51% of DEL's equity through a holding company and the Government of Abu Dhabi has committed to maintain effective ownership of this majority stake for the life of the project, Moody's has classified DEL as a Government Related Issuer (GRI).

"Our rating for the Dolphin debt reflects a strong baseline credit -- operating successfully and generating substantial cashflows, with a conservative debt tenor and an unusually high resilience to commodity price falls," says William Coley, a Vice President-Senior Analyst in Moody's Global Infrastructure Group. "Under our GRI methodology, we then apply a further uplift, which recognises Mubadala's long-term committed role and the project's strategic importance and essentiality to Mubadala, Abu Dhabi and the wider region."

Under its GRI methodology, Moody's has assigned a Baseline Credit Assessment (BCA) of 8 (equivalent to Baa1) to the Senior Debt, and considered the probability of support for DEL from Mubadala and the degree of dependence between the two. Support and dependence are both assessed as high, which is sufficient to deliver a four-notch uplift from the BCA of 8 to the provisional (P)Aa3 rating, one notch below that of Mubadala and the Abu Dhabi Government. The BCA of 8 reflects credit strengths that include the project's established operational status, with a short but satisfactory record of successful production; limited and manageable exposure to construction risk; a conservative financing structure, with a 10-year debt tenor for a project with at least 23 years to run; and the presence of long-term committed gas offtake contracts with government-related entities in Abu Dhabi, Dubai and Oman, which provide an unusual degree of resilience to downside hydrocarbon pricing sensitivities, especially from 2012 onwards. Credit challenges include a degree of freedom under the financing agreements to raise Supplemental and Additional Debt, which would then rank pari passu with the initial Senior Debt, weakening its credit metrics, and DEL's unusual freedom to replace cash in charged accounts with Acceptable Credit Support or Permitted Investments, which would represent a material credit weakness if DEL was not such a strongly-supported GRI.

Further details of Moody's rating rationale for the Senior Debt will be published in an upcoming Pre-Sale Report on www.moodys.com.

Moody's assigns a provisional rating when it is highly likely that the rating will become definitive after all documents are received. Moody's will monitor the transaction on an ongoing basis to ensure that it continues to perform in the manner expected. Any subsequent changes in the rating will be publicly announced and disseminated through Moody's Client Service Desk.

The principal methodology used in rating DEL was Moody's Rating Methodology for the Application of Joint Default Analysis to Government Related Issuers (GRI methodology), which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating DEL can also be found in the Credit Policy & Methodologies directory.

Dolphin Energy Limited is a special purpose entity formed in 2002 in Abu Dhabi to deliver and manage an integrated gas production and distribution project to deliver gas from Qatar's North Field to customers principally in Abu Dhabi, Dubai and Oman for 25 years from 2007.


- Ends -

Editor's Notes
CREDIT RATINGS ARE MIS'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED

TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

Copyright 2009, Moody's Investors Service, Inc. and/or its licensors and affiliates including Moody's Assurance Company, Inc. (together, "MOODY'S").

All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy."

Moody's Investors Service Pty Limited does not hold an Australian financial services licence under the Corporations Act. This credit rating opinion has been prepared without taking into account any of your objectives, financial situation or needs. You should, before acting on the opinion, consider the appropriateness of the opinion having regard to your own objectives, financial situation and needs.

For more information, please contact:
London
William Coley
Vice President - Senior Analyst
Global Infrastructure Finance
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

New York
Thomas J. Keller
Managing Director
Global Infrastructure Finance
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

© Press Release 2009