Oman: OQ Exploration and Production to float up to 25% stake in IPO

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Muscat – OQ Exploration and Production (OQEP), Oman’s largest pure-play oil and gas exploration and production company, and a wholly government-owned upstream operator, announced on Monday its intention to proceed with an initial public offering (IPO) and list its ordinary shares on the Muscat Stock Exchange (MSX).

The offering will provide investors with exposure to one of the top three oil and gas producers in Oman and one of the largest holders of oil and gas reserves in the country. OQEP, the exploration and production arm of OQ Group, has experienced significant growth, expanding its average daily production nearly 14-fold from its inception in 2009 through 2023. Its portfolio includes successful several joint venture partnerships.

OQ, the selling shareholder, plans to sell up to 25% of the total issued share capital of OQEP. Following the offering, a minimum of 75% of the shareholding will remain with OQ.

The subscription period for the IPO is expected to commence this month, pending the required approval from the Financial Securities Authority (FSA). OQEP shares are expected to be listed on the MSX in October.

HSBC, Natixis, OIB, and Sohar International have been appointed as joint global coordinators. Sohar International has also been appointed as the issue manager.

In a press statement, Ashraf Hamed al Mamari, Group CEO of OQ, said, “Today marks a significant milestone in our journey toward enhancing the value of OQ’s portfolio through strategic divestments. The intention to float OQEP reflects our commitment to unlocking new opportunities for growth, both for the company and for Oman. 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. OQEP, with its leading position in maximising Oman’s natural resources, underscores our focus on sustainable development and local value creation. By empowering local communities and supporting small and medium-sized enterprises, we not only maximise local value but also contribute to the long-term economic stability of Oman.”

OQEP Chief Executive Officer Ahmed al Azkawi said, “We are pleased to announce OQEP’s intention to float on the MSX. This milestone represents the culmination of years of hard work. Our core values of operational excellence and sustainability have enabled us to build the company we are now taking public. OQEP is a reliable partner to 13 reputable international companies due to our significant growth trajectory, robust portfolio of assets, and record-breaking production, which has increased nearly 14-fold since our inception.”

The offering will be divided into two tranches. The Category I (institutional tranche) offering represents 60% of the total offering and will be made available to eligible investors in Oman and qualified institutional investors in various other countries, with allocations expected to be made on a pro-rata basis relative to order size. The Category II (retail tranche) offering represents 40% of the total offering and is designated for retail investors in Oman.

If demand in Category II is less than 40% of the offering, any remaining shares after full allocation will be made available to Category I investors in the case of oversubscription.

Dividend policy

OQEP has adopted a quarterly dividend distribution policy, planning to distribute dividends after the IPO.

The company has a strong track record of sustainable cash flow generation and intends to maintain a dividend policy that will return the majority of its distributable free cash flow, after accounting for growth opportunities and investments.

OQEP expects to make its first dividend payment of approximately RO57.7mn in or around December 2024 for Q3 2024, followed by RO57.7mn dividend payment in or around March 2025 for Q4 2024, resulting in an annualised dividend of approximately RO230.7mn. For the following two financial years ending December 31, 2025, and December 31, 2026, the company plans to pay quarterly dividends.