• OQ SAOC intends to offer up to 25% of the shares in OQ Exploration & Production SAOG (under transformation) through an initial public offering (IPO).
• Upon regulatory approval, the intended listing would provide investors with the opportunity to invest in Oman’s largest pure-play oil and gas exploration and production company.
• The subscription period is expected to commence in September 2024, on receipt of required approval from the Financial Services Authority (“FSA”) of the Sultanate of Oman.
• The Listing is expected to take place in October 2024 on the Muscat Stock Exchange.

Muscat, Oman, 09 September 2024: OQ Exploration and Production (“OQEP”), Oman’s largest pure-play oil and gas exploration and production company and its only wholly-Government owned upstream oil and gas operator, today announces its intention to proceed with an initial public offering (the “IPO” or the “Offering”) and to list its ordinary shares (the “Shares”) for trading on the Muscat Stock Exchange (“MSX”).

HSBC, Natixis, OIB and Sohar International have been appointed as joint global coordinators (the “Joint Global Coordinators”). Sohar International has been appointed as the issue manager (“Issue Manager”).

The Offering provides investors exposure to a top three oil and gas producer 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 & gas companies that explore and develop hydrocarbon resources in the Sultanate of Oman.

OQEP benefits from Oman’s fundamental advantages, including (i) its strategic location in a prolific hydrocarbon province with direct access to global shipping routes and logistics hubs; (ii) its well-developed oil and gas sector; (iii) a stable and highly prospective oil and gas operating environment which has attracted many international investors; (iv) the Government of Oman’s encouragement of investment in gas-intensive industries to support economic diversification and hydrocarbon value optimisation; and (v) an established and competitive regulatory and fiscal framework for the hydrocarbon sector.

The Company has a proven track record of delivering value and growth. The Company’s strong cashflows and optimal capital structure supports self-funded growth and attractive shareholder returns.

Commenting on the 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, we not only maximise local value but also contribute to the long-term economic stability of Oman.”

OQEP Chief Executive Officer, Ahmed Al-Azkawi, added:

“We are pleased to announce OQEP’s intention to float on MSX. Since our inception in 2009, we have worked tirelessly to pursue growth opportunities and strengthen our market position. This milestone represents the success of all those years of hard work. Our enterprise core values of operational excellence and sustainability have allowed us to build the company we are now taking public. 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 monetising 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.”

KEY DETAILS OF THE OFFERING

OQ SAOC (“OQ” or the “Selling Shareholder”) expects to sell up to 25% of the total issued share capital of OQEP, with the Company and the Selling Shareholder retaining the right to amend the size of the Offering at any time before the end of the subscription period at their sole discretion, subject to applicable laws and the approval of the FSA. Immediately following the Offering, a minimum of 75% shareholding will continue to be held by OQ.

All the shares being sold by the Selling Shareholder are existing ordinary shares and the Company will not receive any proceeds from the sale of the shares in the Offering, all of which will be paid to the Selling Shareholder. The Offering expenses will be paid by the Selling Shareholder.

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.

The Offering is being offered: (i) in Oman in accordance with Omani laws (including the SAOG Executive Regulations); and (ii) outside the United States to certain institutional investors in reliance on Regulation S (“Regulation S”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Further information on the eligibility requirements for participation in the Offering will be available in the Offering Document upon its publication.

The subscription period for Category I and Category II investors is expected to commence in September 2024, after receiving the required approval from the FSA. Admission of the Shares on the MSX is expected in October 2024 (“Listing”).

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 statement.

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 to 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.

Dividend policy

• 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 OMR 57.7 million (US$150 million) in or around December 2024 in respect of Q3 2024 and approximately OMR 57.7 million (US$150 million) in or around March 2025 in respect of Q4 2024, equivalent to an annualised dividend payment of approximately OMR 230.7 million (US$600 million).
• Thereafter, for the next two financial years ending 31 December 2025 and 31 December 2026, the Company expects to pay quarterly dividends:
  o a base dividend equivalent to approximately OMR 230.7 million (US$600 million) per annum; and
  o a performance linked dividend equal to 90% of expected free cash flow, plus net proceeds from any potential asset disposals minus the base dividend. For this purpose, “free cash flow” means net cash flow from operations minus capital expenditure (which includes any potential investments in oil and gas and the exercising of Government participation rights).
• The Company expects to pay the performance-linked dividend over the next two subsequent quarters, beginning in respect of the first half results for 2025. For example, the first performance linked dividend (with respect to the first half results for 2025) is expected to be paid in two instalments in September 2025 and December 2025.
• The Company has declared and will pay a pre-IPO dividend in respect of first half 2024 financial results of US$300 million.
• The Company’s dividend policy is designed to reflect the Company’s expectation of strong cash flow and expected long-term earnings potential while allowing the Company to retain sufficient capital to fund ongoing operating requirements and continued investment for long-term growth.
• The Company’s ability to pay dividends is dependent on a number of factors, including the availability of distributable reserves, its capital expenditure plans and other cash requirements in future periods, as well as the necessary approvals.

Overview of OQEP

OQEP is Oman’s largest pure-play oil and gas exploration and production company and its only upstream oil and gas operator wholly owned by the Government of Oman. The Company, founded in 2009, currently ranks among the top three oil and gas producers and is one of the largest holders of oil and gas reserves in Oman.

Since inception, the Company has witnessed significant growth, expanding its average daily production nearly 14 times, and averaging 249 kboe/d on a working interest basis by 2023. In 2023, its total production constituted approximately 14 per cent. of Oman’s total oil, gas and condensate production for the year. The Company has 2P working interest reserves of approximately 0.974 billion barrels of oil equivalent (“bboe”) and 2C working interest contingent resources of 820 million barrel of oil equivalent (“mmboe”), based on Company estimates as of 30 June 2024.

The Company has also been the beneficiary of being the only entity since 2009 that has been assigned or nominated by the Government to exercise its participation rights in oil and gas developments in Oman once a declaration of commerciality has been made. The participation right offers the Company an unrivalled avenue to increase resources and de-risk growth, as the participation interest is acquired at historical cost – representing a profitable acquisition opportunity and a valuable source of growth.