OQ's Exploration and Production subsidiary raises $2 billion in Oman’s largest IPO

OQ Exploration and Production (OQEP), a subsidiary of Oman’s state-run energy company OQ, has raised 780 million Omani rials ($2.02 billion) through its initial public offering, making it the sultanate's biggest IPO.

The company has set the final price at 390 baisas per share, OQ said in a statement on Thursday, which is at the top of the indicated range, for its public float on the Muscat Stock Exchange.

The parent company offered roughly two billion ordinary shares in OQEP, or 25 per cent of its total share capital, implying a market valuation on listing of 3.12 billion rials. OQ will continue to own the remaining 75 per cent of the company’s share capital following IPO completion.

The share sale, which ran from September 30 to October 10, attracted “strong demand” from local, regional and institutional investors, including “irrevocable” commitments from six high-profile anchor investors to subscribe for a total of 20 per cent of the offering, OQ said.

“We are pleased that investors have recognised our exceptional track record in value creation, operational excellence and financial performance and we look forward to the next phase of growth as a publicly traded company,” said Ahmed Al Azkawi, chief executive of OQEP.

“The broad support received from both institutional and retail investors … is a testament to our business model, the high quality of our portfolio and our ambitious growth strategy.”

The company’s shares are expected to commence trading on the MSX on or around October 28, under the symbol “OQEP”. OQEP’s portfolio comprises 14 upstream oil and gas exploration and production assets in Oman and includes 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 last year.

The Gulf region has hosted several large IPOs in the past few years, with its capital markets benefiting from high energy prices and business-friendly regulations.

On Wednesday, ADNH Catering, a unit of Abu Dhabi National Hotels, raised Dh864 million ($235 million) through its initial public offering, pricing its shares at the top of the indicated range.

It followed the listing of NMDC Energy, a unit of Abu Dhabi contractor National Marine Dredging Company, which began trading on the Abu Dhabi Securities Exchange in September after closing the biggest IPO in the Emirates this year.

In April, Saudi Arabia's low-cost airline Flynas confirmed plans to list its shares on the Tadawul stock exchange this year, amid the kingdom's ambitions to grow its aviation sector.

IPO activity in the Mena region remained strong in the second quarter of this year, with 14 IPOs raising $2.64 billion. There were 13 IPOs in the same period last year, with proceeds rising by 45.3 per cent on a year-on-year basis, according to EY.

Oman has enacted reforms to boost and diversify its economy, reducing its reliance on the energy sector, most notably on oil and hydrocarbons. The Gulf state launched a three-year fiscal stability programme in October 2022 to add momentum to its economic recovery from the pandemic-driven slowdown and support the development of its financial sector.

The OQEP IPO follows the listing of OQ’s pipeline business – OQ Gas Networks – in October last year, which raised 288 million rials and was the sultanate's biggest IPO at the time. OQGN offered nearly 2.1 billion ordinary shares, representing 49 per cent of issued share capital. OQ owns a 51 per cent stake in OQGN.