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Oman’s national oil company OQ’s upstream business part, OQ Exploration and Production (OQEP), reports that its landmark initial public offering (IPO) has raised $2 billion. The latter is a clear sign that national and international interest in GCC-based oil companies is still very high. The IPO result makes OQEP the largest listed company on the Omani Stock Exchange (MSX). Analysts were already optimistic about the OQEP IPO prospects, as its competitors in the region have already been very successful in the last few years too. OQEP will represent around 25% of the entire market capitalization of the MSX while being the largest IPO in the history of Oman. HSBC Holdings Plc, Natixis SA, Sohar International Bank SAOG and Oman Investment Bank are the joint global coordinators of the IPO.
The IPO floated around 2 billion shares, or 25% of total shares, at an indicative price of 270-290 baizas per share. The first results show that the IPO was 2.7 times oversubscribed. The IPO was put in place not only to finance the strategy of OQ, but is also part of the ongoing privatization program and the push by Oman’s government to diversify its economy and lower overall debt. Last year, OQ already put up its pipeline business, which received around $771 million, and its oil and gas drilling company Abraj Energy Services, raising $244 million. Oman expects another major IPO to hit the market soon, as logistics company Asyad Group is looking at an IPO of its Asyad Shipping subsidiary by the end of 2024.
Based on the IPO results, OQEP will have a total market capitalization of $8.1 billion. Its shares will start trading on MSX by October 28. Investors’ interest was pushed partly by statements that the new company will be paying out a dividend of $600 million each year between 2024 through 2026. At the same time, the company indicated that it will be paying a performance-linked dividend, which is slated to be at a level of 90% of cash flow after investments. The latter is based on a budget assessment based on crude prices hovering between $70-80 per barrel.
The OQEP IPO is, at present, the largest IPO of 2024 in the Middle East. At present, IPOs are again picking up in the region. Until now, IPOs have raised almost $4 billion. OQ also has international investment bank Morgan Stanley and several local banks to assess and work on a possible IPO of its methanol and liquefied petroleum gas unit. The timing for the latter IPO is not yet known.
OQEP’s officials have reported that the newly listed company will be focusing the first years on taking on additional oil and gas projects in Oman. However, as its competitors in the region are already doing, a potential expansion abroad is already on the table.
