Oman’s state-run energy company OQ plans to offer 25 per cent of its shares in its subsidiary, OQ Exploration and Production, in an initial public offering on the Muscat Stock Exchange (MSX) as part of efforts to diversify the country’s economy.
The subscription period will begin this month, pending approval from Oman's Financial Services Authority. The listing is expected to happen in October this year, OQEP said on Monday.
The listing will allow investors to buy shares in Oman’s “largest pure-play oil and gas exploration and production company”, it added.
Ahmed Al Azkawi, chief executive of OQEP, said investor interest in the "unprecedented" listing would be huge.
"This is [potentially] the largest IPO on the MSX in its history ... in addition, the company itself has a lot of benefits given by the government through the back-in rights that we have through the access to our various concessions," he told The National in an interview.
A back-in right is a clause in an oil-and-gas lease that allows the original owner to regain a share of the profit after the new owner has recovered certain expenses from production.
The IPO "definitely provides a unique opportunity to anyone that wants to access, let alone the oil and gas business in Oman, but the Oman market in general", Mr Al Azkawi said.
Parent company OQ will retain at least a 75 per cent ownership stake in the company after the offering.
“The intention to float [OQEP] reflects our commitment to unlocking new opportunities for growth, both for the company and for the Sultanate of Oman,” said Ashraf Al Mamari, group chief executive of OQ.
“Together with our ultimate shareholders at the Oman Investment Authority, we continue to broaden the reach of OQ companies, offering an attractive and robust investment case to the global market.”
HSBC Bank Middle East, Oman Investment Bank, Natixis and Sohar International Bank have been appointed as joint global co-ordinators of the offering.
OQEP plans to pay a dividend of about 57.7 million Omani rials ($150 million) for the third quarter of this year in December, and another 57.7 million rials for the fourth quarter in March next year.
Over the next two financial years – 2025 and 2026 – the company expects to pay quarterly dividends.
This will consist of an annual base dividend of about 230.7 million rials and a performance-linked dividend amounting to 90 per cent of the free cash flow, OQEP said.
OQEP’s portfolio comprises 14 upstream oil and gas exploration and production assets in Oman and includes both onshore and offshore operations as well as assets under service contracts.
The company reported an adjusted revenue of 1.09 billion rials last year, compared with 1.27 billion rials in 2022. OQEP’s adjusted profit fell marginally to about 611 million rials last year.
OQEP’s revenue for the first six months of this year was about 428 million rials, down 23 per cent from the same period of last year.
The company will look to grow into newer markets, Mr Al Azkawi said, but Oman’s stable and improving economic conditions have made it an "attractive area" in which to continue investing, he added.
"We have the right capabilities and the right foresight ... to continue to expand outside, if that becomes more feasible for the good of the company and the shareholders," he added.
The announcement comes as institutions are becoming more selective in their oil and gas investments, focusing on companies with strong ESG (environmental, social, and governance) credentials and low-carbon strategies.
"We have ambitious programmes to continue reducing our emissions by another 25 per cent by 2030, leading to net zero by 2050 [and] most of these plans are quite realistic, so we don't see the energy transition as a threat," Mr Al Azkawi said.
More than half of OQEP's portfolio is made up of gas-producing assets and natural gas is viewed as a transition fuel, he added.
The company's potential listing marks the latest addition to a series of IPOs on Oman's main stock exchange. In October 2023, Oman’s OQ Gas Networks, the pipeline business of OQ, raised 288 million rials in an IPO.
The IPO, which offered nearly 2.1 billion ordinary shares representing 49 per cent of issued share capital, was the largest in the Sultanate at the time.
Last year in March, Abraj Energy Services, OQ's drilling unit, raised about 94 million rials from its IPO. The company sold more than 377 million shares, representing a 49 per cent stake.
