Energy Policy & Regulation

Shares in Oman’s OQ Exploration and Production (OQEP) rebounded on Tuesday following a sharp slump during their debut on the Muscat Stock Exchange a day earlier. The recovery was driven by institutional investors who saw an opportunity to acquire the stock at lower prices after Monday’s sell-off, which was largely triggered by retail investors cashing in on early gains. OQEP, a subsidiary of the state-owned OQ, had just completed Oman’s largest-ever IPO in mid-October, raising OMR748.8 million ($1.94 billion) by selling 25 percent of its shares.

The IPO was structured to appeal to different investor segments. Institutional and anchor investors paid OMR0.390 per share, while individual retail investors received a 10 percent discount at OMR0.351 per share—part of the government's strategy to redistribute national wealth. On its first trading day, OQEP shares fell 8.2 percent to OMR0.358, dragged down by profit-taking among local retail investors. However, on Tuesday, the stock rose 3.4 percent to OMR0.370, supported by strong buying interest from GCC and Omani institutions.

Analysts cited multiple factors behind the initial drop, including a 5 percent decline in Brent crude prices and selling pressure from leveraged retail investors forced to offload shares. Despite this, confidence in OQEP remains strong. With average realized oil prices expected at around $81 per barrel in 2024—well above the $60 breakeven level—analysts believe the company can sustain both its operational commitments and dividend payouts. At Monday’s close, the stock offered a dividend yield exceeding 8 percent, making it attractive to both institutional and individual investors.

Oman’s broader market has gained 5.6 percent this year, buoyed by improving investor sentiment and optimism around the country’s economic reform agenda. Recent IPOs, including those of OQEP, OQ Gas Networks, and Abraj Energy Services, have not only raised significant capital but also attracted new retail and institutional investors to the bourse. Increased trading activity has contributed to a positive market outlook, with expectations that Oman’s index will end 2024 with gains of around 8 percent, supported by earnings growth in key sectors like banking and oil and gas.