Oman’s OQ Exploration and Production to offer 25% shares for public subscription

OQ Group announces to offer 25% of OQ Exploration and Production shares for public subscription

25pc of OQ Exploration and Production Shares to Go on IPO

Muscat: OQ SAOC announced its intention to offer up to 25% of its shares in OQ Exploration and Production (OQEP) Company (under transformation) through an initial public offering (IPO), on receipt of required approval from the Financial Services Authority (FSA).

Immediately following the Offering, a minimum of 75% shareholding will continue to be held by OQ.

Commenting on the Intention to Float (ITF), Ashraf Hamed Al Mamari, Group CEO of OQ said, “Today marks a significant milestone in our journey towards enhancing the value of OQ’s portfolio through strategic divestments. The intention to float OQ Exploration and Production reflects our commitment to unlocking new opportunities for growth, both for the company and for the Sultanate of 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. OQ Exploration and Production, 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 (SMEs), we not only maximise local value but also contribute to the long-term economic stability of Oman.”

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

The Offering provides investors exposure to one of the top three oil and gas producers and one of the largest holders of reserves in the Sultanate of Oman. The Company has witnessed significant growth, expanding its average daily production nearly 14 times from its inception in 2009 to 2023. OQEP’s portfolio includes successful joint venture partnerships. The Company has been the partner of choice for international oil and gas companies that explore and develop hydrocarbon resources in the Sultanate of Oman.

On his turn, OQEP Chief Executive Officer, Ahmed Said Al Azkawi, added that “We are pleased to announce OQEP’s intention to float on Muscat Stock Exchange (MSX). Since our inception in 2009, we have worked tirelessly to pursue growth opportunities and strengthen our market position. OQEP is a reliable partner for 13 reputable international companies owing to our significant growth trajectory, robust portfolio of assets, and record-breaking production of nearly 14 times higher since inception. Our strategic goals, aligned with Oman’s Vision 2040, focus on monetizing the country’s hydrocarbon resources while supporting the energy transition. Additionally, stimulating the local economy is central to our sustainability initiatives, which includes developing local talent and supporting our CSI projects to increase our contributions to In-Country Value. We continue to build on our success and invite investors to be part of this unique opportunity and successful journey.”

The Offering will be offered in two tranches to eligible investors in Oman and qualified institutional and other investors in a number of countries (the “Category I Investors”) and retail investors in Oman (“Category II Investors”). It will be conducted in the manner approved by the FSA and will be carried out concurrently.

Category I (Institutional Tranche) Offer represents 60% of the total Offering and will be made to eligible investors in Oman and qualified institutional and other investors in a number of countries, which is expected to be on a pro-rata basis.

Category II (Retail Tranche) Offer represents 40% of the total Offering for retail investors in Oman. Retail investors in the Category II Offer will be assigned as either a large retail investor or a small retail investor depending on the size of their subscription amount. A portion of the Category II Offer will be made available to large retail investors and the remainder of the Category II Offer will be made available to small retail investors.

If the aggregate demand in Category II is less than 40% of the Offer, then after full allocation to the Category II investors, the balance of the shares shall be made available to Category I investors, if there is oversubscription in Category I.

Sohar Islamic Shariah Supervisory Board has issued a pronouncement confirming that, in its view, based on the circumstances as at the date of this pronouncement, the Offering is Sharia compliant in accordance with pertinent Sharia principles of the AAOIFI Sharia standards as of the date of this announcement.

Further details of the Offering, the Category I Offer and the Category II Offer (including large retail and small retail thresholds) will be included in the Offering Document which is expected to be published by the Company prior to the start of the subscription period. The completion of the Offering and Listing of the shares for trading on the MSX is expected in October 2024, subject to market conditions and obtaining relevant regulatory approvals in Oman, including approval of the Listing.

The shares held by the Selling Shareholder following completion of the Offering shall be subject to a lockup which starts on the date of Listing and ends 180 calendar days thereafter, subject to customary exceptions and waiver by the Joint Global Coordinators.

The Company will also be subject to a lock-up starting on the date of the Listing and ending 180 calendar days thereafter. The Company has adopted a quarterly dividend distribution policy to pay dividends after the Offering.

The Company has a track record of robust and sustainable cashflow generation and intends to maintain a dividend policy designed to return substantially all of its distributable free cash flow after providing for growth opportunities and investments.

The Company expects to pay the first dividend distribution of approximately RO 57.7 million (US$150 million) in or around December 2024 in respect of Q3 2024 and approximately RO 57.7 million (US$150 million) in or around March 2025 in respect of Q4 2024, equivalent to an annualized dividend payment of approximately RO 230.7 million (US$600 million).

OQEP represented approximately 14% gas production market share in 2023, up from approximately 5% in 2017, and gas making up approximately 43% of OQEP’s total production in 2023, up from approximately 29% in 2017.

OQEP’s high-quality asset base, experienced management team, and commitment to operational excellence have supported an impressive operational performance. At 249 kboepd, current average daily production volumes are nearly 14 times higher than in OQEP’s first year of inception.