S&P assigns inaugural 'BBB-' global issuer rating to OQEP

MUSCAT: OQ Exploration & Production SAOG (OQEP) - the upstream arm of Oman’s integrated energy group OQ - has secured its inaugural global credit rating, with S&P Global Ratings assigning the company a 'BBB-' long-term issuer credit rating and a 'gcAA-' Gulf Cooperation Council (GCC) regional scale rating, both with a Stable outlook.
The maiden investment-grade rating marks an important milestone for OQEP following its listing on the Muscat Stock Exchange in late 2024, providing independent validation of the company's financial strength and enhancing its standing among international investors and lenders.
S&P said the global-scale rating reflects OQEP's position as a core subsidiary of state-owned parent OQ SAOC, which retains a 75-per cent stake in the company. The ratings agency noted that OQEP contributes between 45 and 60 per cent of the OQ Group's reported EBITDA and plays a pivotal role in generating the cash flows that support the group's broader strategic transition towards lower-carbon businesses.
'OQ E&P's creditworthiness is closely aligned with OQ's 'bbb-' group credit profile,' S&P said, adding that the upstream producer is strategically and operationally integrated within the wider OQ Group.
The rating agency highlighted OQEP's strong operating fundamentals, including preferential rights to participate in new upstream blocks as the Omani government's preferred partner, an 11-year proved and probable (2P) reserve life as of the end of 2025, and long-term Exploration and Production Sharing Agreements (EPSAs) covering around 90 per cent of production.
These agreements allow the company to recover exploration and development costs before profit sharing with the government, while also incorporating deferred cost-recovery mechanisms during periods of lower oil prices or production. The contracts carry no royalty payments, and the government assumes responsibility for income tax on its share of hydrocarbon production, supporting profitability and cash-flow resilience.
S&P also pointed to OQEP's conservative financial policy as a key credit strength. The company aims to maintain net debt-to-EBITDA below 1.0 times under normal market conditions, with an upper ceiling of 1.5 times even under a conservative oil price assumption of $55 per barrel. The agency expects these metrics to remain comfortably within target through 2026 and 2027 despite potential volatility in global crude markets.
Since its establishment in 2009, OQEP has expanded production by more than thirteen-fold through a combination of organic growth, acquisitions and participation in the Omani government's 'back-in rights' programme, under which it can acquire stakes in commercially proven upstream developments at historical cost.
S&P nevertheless noted that OQEP's business profile remains constrained by its concentration in Oman, midsized operating scale and exposure to the cyclical nature of the hydrocarbon sector. At the end of 2025, the company reported working-interest production of 224,000 barrels of oil equivalent per day and 2P reserves of 0.9 billion barrels of oil equivalent.
The agency also cited Oman's strategic export infrastructure as a supportive factor. Unlike other Gulf producers, Omani crude exports do not rely on the Strait of Hormuz, with oil shipped primarily through Mina Al Fahal on the Arabian Sea. This has reduced the country's exposure to maritime disruptions during recent regional tensions and reinforced the resilience of its hydrocarbon exports.