After Aramco’s $25.6 billion IPO, could this be Middle East’s next mega listing?

on Dec 9, 2019
Updated: Mar 11, 2020
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  • Oman Oil Company’s 2020 IPO could be the Middle East’s next mega IPO.
  • The oil company that is wholly owned by Gulf Oil is set to give away a 25% stake in the company.
  • The new round of funding will go towards covering the company’s shore up budget deficit following 2014’s oil price crash.

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Gulf Oil, not a member of the OPEC, is preparing to issue an
Initial Public Offering of its wholly-owned company, Oman Oil Company. Gulf Oil started operations
in 1901 and was known for being one of the largest producers back in the 90s;
it was also one of the so-called Seven Sisters oil companies.

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Oman Oil Company
will be looking to sell off 25% of Gulf’s shareholding in it by the end of next
year. The oil company is looking to raise capital to counter its shore up budget
deficit after the 2014 oil price crash.

In a report by Reuters, Mohammed
al Rumhy, Oman’s Oil
Minister said last Wednesday that Oman Oil Company selected a team of
underwriters for its IPO just a few hours after the closing of Aramco’s successful IPO.

After the 2014-2015
oil price crash, oil-dependent states such as Oman were affected and the recent
modest oil price increments haven’t been doing these economies much good,
further widening the countries’ budget deficits.

If the IPO hits
the market as well as that of its rival company, Aramco, then Oman would use
the funds to clear the deficits and possibly, put in place measures to diversify
away from oil.

A report by S&P Global Ratings indicates
that about 35% of Oman’s GDP is attributed to oil and gas. The commodities also
make up 70% of its fiscal revenue and 60% of its total exports.

In the October
report, S&P Global Ratings said: “Given this high reliance on the
hydrocarbon sector, we view Oman’s economy as undiversified and subject to
global oil industry dynamics.”

Oman belongs to the non-OPEC partners in OPEC+’s supply cut deal. Al Rumhy said that the company will later this
week advise the other OPEC members to extend the supply cuts until the end of
next year, perhaps to “spice up” its IPO deal.

OPEC members last Thursday and Friday met in Vienna to discuss a
possible rollover of the supply cuts until the end of the first quarter of next
year, a decision they passed last week.

The Omani oil
minister told Reuters that he remained confident that the verdict of the
members in last week’s Vienna meeting is still welcomed, but hopes the cuts can
later be extended.

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