Oman’s national oil company, OQ, has announced a successful initial public offering (IPO) for its upstream subsidiary, OQ Exploration and Production (OQEP), raising $2 billion. This achievement highlights sustained national and international interest in oil companies based in the Gulf Cooperation Council (GCC) region. The IPO positions OQEP as the largest listed entity on the Muscat Stock Exchange (MSX), with the company expected to account for approximately 25% of the total market capitalization of the exchange.
Analysts had expressed optimism regarding the prospects of the OQEP IPO, especially given the success of regional competitors in recent years. The IPO marks a significant milestone as it is the largest in Oman’s history. Major financial institutions, including HSBC Holdings Plc, Natixis SA, Sohar International Bank SAOG, and Oman Investment Bank, served as joint global coordinators for the offering.
The IPO involved the flotation of approximately 2 billion shares, representing 25% of the company’s total shares, at an indicative price range of 270-290 baizas per share. Initial results revealed an oversubscription of 2.7 times, demonstrating strong investor demand. This fundraising effort not only aims to finance OQ’s strategic initiatives but also aligns with Oman’s ongoing privatization efforts and its broader goal to diversify the economy and reduce national debt.
Last year, OQ raised about $771 million through its pipeline business and $244 million from its oil and gas drilling subsidiary, Abraj Energy Services. Anticipation is building for another significant IPO, as logistics company Asyad Group plans to list its Asyad Shipping subsidiary by the end of 2024.
With the IPO results, OQEP is expected to achieve a total market capitalization of $8.1 billion, and its shares are set to begin trading on the MSX on October 28. Investor interest was further buoyed by the announcement of an annual dividend payout of $600 million from 2024 to 2026, alongside a performance-linked dividend, projected to reach 90% of cash flow after investments, contingent upon crude oil prices remaining between $70 and $80 per barrel.
As the largest IPO in the Middle East for 2024, OQEP’s offering comes at a time when IPO activity is revitalizing in the region, which has seen nearly $4 billion raised from IPOs to date. OQ is also collaborating with Morgan Stanley and several local banks to explore a potential IPO for its methanol and liquefied petroleum gas unit, although the timing of this initiative remains uncertain.
OQEP officials indicated that the newly listed company will initially concentrate on securing additional oil and gas projects within Oman. However, similar to its regional competitors, plans for international expansion are being considered.
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