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Oman’s energy powerhouse to sell 49% of oil drilling unit IPO

Oman and Bahrain are the only countries in the six-nation Gulf Cooperation Council not classified as emerging markets by MSCI Inc

Oman’s state energy company OQ SAOC plans to sell up to 49% of its fully-owned oil drilling unit Abraj Energy Services SAOC in an IPO as part of an exit plan from 35 companies for sovereign wealth fund, the Oman Investment Authority (OIA), as per reports.

According to a statement on the Abraj website, the subscription period will begin in February 2023, and the shares are anticipated to list on the Muscat Stock Exchange in March.

Abraj, a company offering oil and gas services, is also the biggest drilling contractor in Oman, according to Reuters, with a market share of about 30%.

While 15% of the total offering will be made available to retail investors, the remaining 85% of the sale will go to institutional investors.

The global coordinators for the IPO are Ahli Bank Oman, EFG Hermes UAE, and the National Bank of Oman. The offer is open to both investors in Oman and from other countries.

It’s anticipated that the subscription period will start in February 2023. Market circumstances and numerous regulatory clearances will all affect the IPO.

According to Abraaj, which has 25 drilling rigs and five workover rigs, its order backlog for 2023–2031 is 593 million Omani rials (USD 1.5 billion), which is greater than the company’s income for the previous five years. The business anticipates paying an 85% dividend for the last year, 2023.

Abraj Chairman Ayad Al Balushi said, “We think the company’s future is very bright, in part because it is already prequalified in four countries to do a wide range of services. This sets the stage for international expansion that will bring growth and shareholder value.”

Oman is joining its energy-rich Gulf neighbours UAE and Saudi Arabia in selling assets to fund the diversification of their economies and open up their stock markets to more international investors.

The drive led to a profitable year for IPOs in the region in 2022, defying a global slump in share sales caused by fears over high inflation and interest rate hikes.

The Oman Investment Authority announced in December 2022 its plans to raise over USD 1.3 billion by exiting its investments in eight sectors in 2023, from energy to aviation, tourism and communications and information technology.

OQ is also planning an IPO of its gas pipelines unit that could raise as much as USD 800 million, Bloomberg News reported in September 2022.

The country has a long way to go in its IPO journey. The country saw its major IPO listing in 2010 when telecom operator Nawras, now known as Ooredoo, raised USD 475 million. Since then, nothing significant has happened on this front.

Oman and Bahrain are the only countries in the six-nation Gulf Cooperation Council not classified as emerging markets by MSCI Inc. The market capitalisation of Oman’s stock exchange is about USD 22 billion.

Oman pumps around 1 million barrels of oil a day. While it’s not an OPEC member, it is part of the OPEC+ alliance. The country estimated in 2022 that it would boost oil production by more than 10% in 2023 to 1.175 million barrels per day.

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