Summary: Korea National Oil Corp.

The ratings on KNOC are equalized with that of the South Korean government. KNOC plays a critical role as the government's solely and legally mandated oil policy arm, which manages the nation's strategic petroleum reserves (SPRs), and aims to increase Korea's oil self-sufficiency rate. The Korean government's full ownership of KNOC also enables ongoing financial support, and tight supervision. We expect higher oil price trends to support the company's earnings and cash flows. Constituting nearly all of its earnings from exploration and production (E&P), we expect higher oil price trends to uplift KNOC's EBITDA. From US$50 a barrel (bbl) in 2017, we expect Brent oil to rise by another US$15-US$20/bbl over the next two years, driven by supply constraints from

...The ratings on KNOC are equalized with that of the South Korean government. KNOC plays a critical role as the government's solely and legally mandated oil policy arm, which manages the nation's strategic petroleum reserves (SPRs), and aims to increase Korea's oil self-sufficiency rate. The Korean government's full ownership of KNOC also enables ongoing financial support, and tight supervision. We expect higher oil price trends to support the company's earnings and cash flows. Constituting nearly all of its earnings from exploration and production (E&P), we expect higher oil price trends to uplift KNOC's EBITDA. From US$50 a barrel (bbl) in 2017, we expect Brent oil to rise by another US$15-US$20/bbl over the next two years, driven by supply constraints from Iran and Venezuela sanctions, and rising demand from developing countries. As a result of higher oil prices, we expect KNOC's annual EBITDA to average around Korean won (KRW) 1.6 trillion over the next two years, compared with KRW1.1...

Summary