OQ, Oman’s state-owned integrated energy group, raised approximately $2.5 billion through initial public offerings (IPOs) of its subsidiaries OQ Exploration & Production (OQEP) and OQ Base Industries (OQBI) during the fourth quarter of 2024. The IPOs represent a significant financial milestone for the group, showcasing its robust fiscal health.
On December 24, 2024, Fitch Ratings revised OQ’s outlook to “Positive” from “Stable” while affirming its Long-Term Issuer Default Rating (IDR) at ‘BB+’. Fitch attributed this revision to OQ’s strong ties with the Omani government through its parent entity, Oman Investment Authority (OIA). The support received from the government includes equity injections, asset transfers, shareholder loans, and debt guarantees, Fitch noted.
“OQ’s rating is constrained by that of Oman (BB+/Positive), as underlined by its strong links with its ultimate sole shareholder, the Omani state, in line with Fitch’s Government-Related Entities (GRE) Rating Criteria and Parent and Subsidiary Linkage (PSL) Rating Criteria. OQ is fully owned by the state via Oman Investment Authority (OIA) and was established to strengthen and centralise Oman’s oil and gas industry,” Fitch stated.
The ratings upgrade follows Fitch’s recent revision of Oman’s sovereign rating outlook to “Positive” from “Stable,” citing improvements in the nation’s finances. The move places Oman on track to achieve an investment-grade rating from all three major rating agencies.
Fitch highlighted OQ’s IPO successes in 2024, noting that while the group raised substantial proceeds, it retains majority stakes in OQEP and OQBI. The funds from the IPOs are earmarked for debt prepayment, dividends, and strategic growth projects, including expanding OQ’s gas network capacity and fuel storage facilities.
In 2023, OQ reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of over $3.9 billion, generated from upstream production of 227,000 barrels of oil equivalent per day (boepd). OQEP, a subsidiary, manages a portfolio of 14 oil and gas assets, accounting for approximately 14% of Oman’s total hydrocarbon production in 2023.
OQ has demonstrated a consistent track record in debt reduction through cash flow generation and asset sales. The group repaid $1.3 billion in net debt in 2023, reducing its total debt to $9.5 billion by the year’s end. Fitch projects this figure will drop further to about $8 billion by the end of 2024.
The group also holds controlling interests in strategic assets. Fitch noted, “OQ is the main downstream company owning all domestic refining assets producing transport fuels for the Omani market and is tasked with increasing the value per barrel of extracted oil by further expanding its refining and petrochemical assets. It is also the exclusive operator of Oman’s domestic natural gas transportation infrastructure. In 2022 OQ was appointed the national champion for clean energy and green hydrogen by the government and is the main developer of Oman’s alternative energy projects.”
OQ’s position as a key player in Oman’s energy landscape underscores its commitment to driving growth while aligning with the government’s economic and environmental goals. The group’s strategic initiatives and fiscal discipline position it as a critical driver of Oman’s energy sector and broader economic development.