Oman’s OQEP plans IPO in October

MUSCAT: Oman’s OQ Exploration and Production (OQEP) has initiated a significant move towards public investment by planning an initial public offering (IPO) to list its ordinary shares on the Muscat Stock Exchange (MSX).

The strategic decision, expected to take place in October 2024, marks a pivotal moment in OQEP’s journey towards enhancing its capital base and aligning with Oman’s Vision 2040.

The subscription period for the IPO is set to commence in September 2024, contingent upon the receipt of requisite approvals from the Financial Services Authority (FSA) of Oman.

OQ SAOC intends to offer up to 25 per cent of OQEP’s shares, with the flexibility to modify the share size before the conclusion of the subscription period.

The offering is structured into two distinct tranches.

The first is the Category I tranche, which will represent 60 per cent of the offering and will be available to eligible investors in Oman and qualified institutional investors in international markets. Conversely, the Category II tranche, constituting the remaining 40 per cent, is designated for retail investors within Oman.

The leadership of OQEP has committed to a quarterly dividend distribution policy post-IPO, with an anticipated annualized dividend payment estimated at approximately OMR 230.7 million (around $600 million).

Exploring growth opportunities

The financial strategy not only underscores the company’s objective of providing tangible returns to its shareholders but also reflects a robust commitment to sustainable growth within the region.

Renowned financial institutions such as HSBC, Natixis, OIB, and Sohar International have been appointed as joint global coordinators, with Sohar International serving as the issue manager for the offering.

In discussing the IPO, OQEP’s Chief Executive Officer, Ahmed Al-Azkawi, emphasised the alignment of the company’s strategic goals with Oman’s Vision 2040, particularly the emphasis on monetising the country’s hydrocarbon resources while supporting the transition towards sustainable energy sources. He articulated that part of OQEP’s sustainability initiatives is focused on stimulating the local economy, which includes developing domestic talent and contributing to initiatives that enhance In-Country Value (ICV).

While Al-Azkawi did not disclose specific capital raising targets for the IPO, he highlighted the company’s intent to explore growth opportunities within Oman in the immediate future. He acknowledged the attractiveness of the local petroleum agreements and the country’s investment climate, characterised by stability and local expertise.

Furthermore, he noted the past success of attracting investments in the region, which bodes well for OQEP’s future prospects.

When posed with inquiries regarding potential geographic expansions, Al-Azkawi remarked on the complexities and variables involved in such decisions.

He indicated that future investments would depend heavily on geopolitical dynamics and the unique technical challenges associated with different regions. This careful consideration reflects the nuanced approach that OQEP is adopting as it navigates the complex landscape of global energy exploration.

In terms of financial health, OQEP contributed to approximately 14 per cent of Oman’s total oil, condensate, and gas production in 2023, while accounting for approximately 40 per cent of OQ Group’s adjusted EBITDA during the same year.

As of June 30, 2024, the company had managed its net external debt efficiently, posting a negative balance of $329 million.