Moody's upgraded OMV AG's issuer and senior long-term debt ratings to A3 from Baa1, with a stable outlook, saying the business profile of the Austrian oil company has improved following a two-year transformation.

Over that time, OMV disposed of high-production-cost assets such as its U.K. upstream operations, and made acquisitions including the €1.7 billion purchase of a 24.99% stake in Gazprom's YuzhnoRusskoye gas field.

The rating agency said the divestments increased OMV's financial flexibility and created financial headroom for the company, while the acquisitions boosted its business profile as they added substantial and low-cost upstream production and reserves.

"Despite these sizeable acquisitions and Moody's expectation that the company will continue to invest in a growing upstream production base over the next few years, the rating agency expects that OMV's financial profile will remain strong," Moody's said.

Moody's expects OMV to generate free cash flow of more than €1 billion annually through 2019. The company's adjusted EBITDA is forecast to keep rising to about €5.5 billion.

"The downstream refining and marketing operations in particular will continue to support the company's cash flow and enable OMV to generate more stable cash flows than most of its integrated peers during volatile crude oil prices," Moody's said.