Oman’s national oil company, OQ, has announced that its upstream division, OQ Exploration and Production (OQEP), has successfully raised $2 billion in its initial public offering (IPO). This impressive outcome highlights the strong interest in oil companies based in the Gulf Cooperation Council (GCC) region from both national and international investors. As a result of this IPO, OQEP has become the largest listed company on the Omani Stock Exchange (MSX).
Analysts had high hopes for the OQEP IPO, especially given the recent successes of its regional competitors. OQEP now represents approximately 25% of the total market capitalization of the MSX, marking it as the largest IPO in Oman’s history. The joint global coordinators for the IPO are HSBC Holdings Plc, Natixis SA, Sohar International Bank SAOG, and Oman Investment Bank.
The IPO offered around 2 billion shares, equating to 25% of the total shares, with an indicative price ranging from 270 to 290 baizas per share. Initial reports indicate that the IPO was oversubscribed by 2.7 times. The primary purpose of this IPO is to finance OQ’s strategic initiatives. Additionally, it aligns with Oman’s ongoing privatization efforts and the government’s aim to diversify the economy and reduce overall debt. Last year, OQ raised $771 million through the sale of its pipeline business and $244 million from its oil and gas drilling company, Abraj Energy Services. Looking ahead, Oman expects another significant IPO from logistics company Asyad Group, which plans to launch an IPO for its Asyad Shipping subsidiary by the end of 2024.
With the IPO results, OQEP’s total market capitalization is estimated at $8.1 billion. Trading for its shares is set to begin on the MSX by October 28. Investors have shown strong interest in the IPO, partly due to the announcement that OQEP will distribute $600 million in dividends annually from 2024 to 2026. Furthermore, the company plans to offer a performance-linked dividend, projected to be 90% of its cash flow after investments, based on a budget that assumes crude prices between $70 and $80 per barrel.
Currently, the OQEP IPO stands as the largest IPO in the Middle East for 2024. The region has seen a resurgence in IPO activity, with total funds raised nearing $4 billion so far this year. OQ is also collaborating with the international investment bank Morgan Stanley and several local banks to evaluate a potential IPO for its methanol and liquefied petroleum gas unit, though the timeline for this offering remains uncertain.
Officials from OQEP have stated that the newly listed company will focus on taking on new oil and gas projects in Oman in the coming years. However, like its regional competitors, OQEP is also considering potential expansion into international markets.
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