Oman's OQ drilling unit raises $244m in IPO

Company's initial public offering drew about $2 billion in bids

Muscat Stock Exchange. Courtesy Investcorp
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Abraj Energy Services, the drilling unit of Oman’s state energy company OQ, raised about 94 million Omani rials ($244 million) from its initial public offering.

The company, which sold more than 377 million shares, equivalent to a 49 per cent stake, set the final offer price at the higher end of 249 baizas (65 cents) a share amid strong demand from regional, international and local investors.

The lower range of the initial share offer was 242 baizas.

The IPO, which is the country's biggest since the 2010 listing of telecom operator Nawras (Ooredoo Oman), was "heavily oversubscribed" and generated more than 790 million Omani rials ($2 billion) in bids, the company said on Tuesday.

The company's shares will start trading on the Muscat Stock Exchange on March 14., subject to it receiving regulatory approval.

Ahli Bank of Oman, EFG Hermes, National Bank of Oman are leading the IPO.

Abraj has a fleet of 25 drilling and five workover rigs. It controls a 29 per cent market share in Oman.

Its remit also includes well services, comprising fracturing, cementing and coiled tubing operations.

Abraj, which reported a full-year revenue of $323 million in 2021, has an order backlog of $1.5 billion for the period between 2023 and 2031.

The company's earnings before interest, taxes, depreciation and amortisation (ebitda) margin reached 37.5 per cent in the first nine months of last year.

The deal is the latest in a string of IPOs from the Gulf region, where economies have benefitted from higher oil and gas prices.

Brent crude, the benchmark for two thirds of the world’s oil, was trading at about $86 a barrel on Tuesday, after falling below $30 in 2020.

In October, Arabian Drilling Company, a Saudi Arabian oilfield services business, raised $712 million from the sale of a 30 per cent stake in an IPO amid strong interest from retail investors.

Adnoc Drilling, which is majority owned by Adnoc, was listed on the Abu Dhabi Securities Exchange in 2021.

In December, shares of Saudi Aramco Base Oil Company, better known as Luberef, began trading on the Tadawul stock exchange after it raised $1.32 billion in its IPO.

While capital markets in the US and Europe have slumped amid inflation woes and fears of a looming recession, equity markets in the GCC and broader Mena region have had a flurry of IPOs.

Last week, Adnoc raised about Dh9.1 billion ($2.5 billion) from the sale of a 5 per cent stake in its gas business, marking the world's largest listing so far this year after the Middle East registered 48 listings in 2022.

Middle East IPOs raised more than $23 billion in 2022, compared with $7.52 billion raised from 20 offerings in the previous year.

That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.

Between announced and rumoured IPO plans, the GCC region is expected to float 27 to 39 companies this year, according to Kamco Invest.

Updated: March 08, 2023, 5:08 AM