Oman's state energy company OQ plans to list drilling unit Abraj in Muscat

Up to 49 per cent of Abraj is expected to be offered to investors

Muscat Security Market building, the only stock exchange in Muscat the capital of the Sultanate of Oman on Wednesday, Oct. 12, 2011. (Silvia Razgova/The National)
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Oman’s state energy company OQ plans to sell up to 49 per cent stake in its drilling unit, Abraj Energy Services, through an initial public offering, becoming the latest oil and gas drilling company in the GCC to seek a listing amid higher energy prices.

The IPO subscription period is expected to begin next month, subject to receiving the required approval from Oman's Capital Market Authority, Abraj said in a statement on Sunday.

The company intends to list on the Muscat Stock Exchange in March.

"Through this offering, we believe investors have an opportunity to gain exposure to a profitable, growing company with one of the Mena region’s youngest drilling fleets," said Saif Al Hamhami, the company's chief executive.

"We believe the company’s future is very bright, not least because it is already prequalified in four countries to conduct a range of services, setting the stage for international expansion geared towards delivering growth and shareholder value."

Abraj has a fleet of 25 drilling rigs and five workover rigs with a 29 per cent market share in Oman, the company said.

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

Abraj, which reported a full-year revenue of $323 million in 2021, has an order backlog of $1.5 billion for the years 2023 through to 2031, it said.

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

All the shares being sold by OQ are existing shares and the offering will be carried out in two tranches. While institutional investors — including those worldwide except the US — will be offered a maximum of 85 per cent, retail investors will receive a minimum of 15 per cent of the total offering.

“We are confident that Abraj is now well-positioned to enter its next phase of growth as a publicly listed company on the Muscat Stock Exchange and look forward to welcoming our new shareholders on our growth journey," said Ayad Al Balushi, Abraj’s chairman.

The deal is the latest in a string of IPOs from the Gulf region, where economies have benefited from higher oil and gas prices. Brent crude, the benchmark for two thirds of the world’s oil, is trading at about $87 a barrel, after falling below $30 in 2020.

In October, Arabian Drilling Company, a Saudi Arabian oilfield services company, 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.

The company is looking to expand into the GCC as drilling activity increases, chief executive Abdulrahman Al Seiari told The National in an interview in November.

Last month, 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.

The Mena market recorded a 500 per cent annual increase in the number of listings during the first six months of last year, with 24 IPOs raising $13.5 billion, according to an EY report. In the second quarter of 2022, nine IPOs raised about $9 billion.

The UAE was the biggest IPO market in terms of the aggregate value of deals, while Saudi Arabia led volume with five IPO deals in the first six months of the year, EY said.

Updated: January 22, 2023, 12:33 PM