International ratings agency Fitch Ratings has revised the Outlook on wholly Omani state-owned Energy Development Oman SAOC's (EDO) Long-Term Issuer Default Rating (IDR) to Positive from Stable, and affirmed the IDR at 'BB'.

The rating action follows the revision of the Outlook on Oman's sovereign rating, Fitch said in a statement.

“EDO's IDR is constrained by the rating of its sole shareholder, the government of Oman (BB/Positive), given their close links. We assess EDO's Standalone Credit Profile (SCP) at 'bbb', supported by large-scale oil and gas operations and low leverage. The SCP is constrained by a fairly complex operating structure and short 1P reserves life, albeit with a strong record of successful reserves replacement,” it further noted.

EDO is Oman's national energy company and owns participating interests in two concessions, accounting for approximately 65 per cent of Oman's oil and gas production.

Earlier this week, EDO announced that it had successfully renegotiated the terms of its $2.5 billion loan, resulting in cost savings of $100 million in interest. The borrowing cost of EDO is largely based on the credit rating of the Sultanate of Oman.

In 2022, the rise in oil and gas prices along with the government’s continued efforts to ensure financial sustainability led to two ratings agencies, Fitch Ratings and Standard and Poor’s (S&P), raising their rating assessments.

This improvement in the credit outlook attracted more investors to the Sultanate.

S&P Global Ratings has revised its outlook on Oman to positive from stable while affirming its ‘BB/B’ long- and short-term foreign and local currency sovereign credit ratings. According to the report, Oman’s government is repairing its balance sheet, with debt repayments and strong nominal GDP growth.