OQEP announces strong results in 2024

MUSCAT: Oman’s leading exploration and production company, OQ Exploration and Production SAOG (“OQEP”), which was listed on the Muscat Stock Exchange in October 2024, has announced its financial results for the fiscal year that ended December 31, 2024. The financial results for the year demonstrate OQEP’s continued ability to generate strong and predictable cash flows from its high-quality asset base.

The company achieved an EBITDA of RO 614 million. Revenues totalled RO 841 million ($2,188 million), generating an earnings before interest, taxes, depreciation, and amortization (EBITDA) of RO 614 million ($1,596 million). Free cash flow stood at RO 251 million ($654 million).

Ahmed al Azkawi, Chief Executive Officer, OQEP, commented: “OQEP has delivered a strong set of results for the year, built upon our position as a low-cost operator of high-quality assets, generating industry-leading returns. During the year, OQEP listed its shares on the Muscat Stock Exchange. The Offer generated strong investor demand and raised RO 780 million. As part of our strategy to deliver shareholder value, we announced a planned return of capital in the form of dividends, with a target base dividend of RO 230 million for 2025 and 2026, subject to company performance and Board approval. The proposed return of capital can also be enhanced with a performance dividend.

“We continue to be the partner of choice for the Omani Government and many IOCs who partner with us to develop Oman’s energy resources. Our location and our mix of products means that OQEP is well placed to meet the oil demand, and increasingly gas, to the global market.

“We continue to develop our assets in line with our strategy. We increased the reserves of our key asset, Block 60, through improved recovery techniques, including infill drilling, and new discoveries. We are also discussing with our partners the opportunities to unlock further growth across our portfolio, as well as pursuing new licensing opportunities.

“Our decarbonization strategy continues to be implemented successfully with Block 60 emission intensity already below the Oil and Gas Climate Initiative’s target of 17kg CO2/boe at 14.33kg CO2/boe for 2024.

OQEP continued to deliver sustainable cash generation from its assets during 2024. Revenue was supported by stable production levels during the year, with revenue attributable to gas increasing by 20% due to increased market demand. The reported figures for financial year 2024 were negatively affected by the sale of 40% of Block 60 in 2023. The 2023 full-year financials include 100% production from Block 60 and a resultant gain of RO 274.6 million on divestment. Excluding the impact of Block 60 divestment, the net profit for 2024 would have been 2.4% lower compared to 2023. In addition, a slight oil price decrease of USD 3.2/bbl in 2024 compared to 2023 further impacted the 2024 results.

OQEP’s dividend policy is linked to sustainable cash flow generation for its shareholders and is expected to comprise a base dividend of RO 230.7 million (USD 600 million) and a performance-linked dividend equal to 90% of the Company’s expected free cash flow plus the net proceeds from any potential asset disposals, minus the base dividend. Dividend policy is subject to considerations, including the prevailing market conditions and the operating environment outlook for the Company’s business.

OQEP has already distributed an aggregate dividend of RO 173 million in 2024, and the Board of Directors has proposed an additional cash dividend of RO 57.68 million. Shareholders will receive a cash dividend of 7.21 Baizas per ordinary share. The proposed cash dividend is subject to formal approval of the Annual General Meeting of shareholders, scheduled to be held on 12 March 2025.

OQEP has a high-quality portfolio of fourteen upstream oil and gas assets in Oman. These assets range from those in the development and production phase to others being appraised for commerciality or undergoing exploration programmes. OQEP either operates these assets or acts as a participant or non-operator alongside one or more joint venture partners.

Of its fourteen assets, six are key producing assets. Block 60 is OQEP’s flagship asset, an onshore contract area producing primarily oil, accounting for nearly 16% of OQEP’s total working interest production in 2024. During the year, production strategies were carefully designed to maximize recovery while ensuring the long-term sustainability of Block 60’s resources. Operating costs were carefully managed, achieving a cost per barrel of USD 5.94. Discoveries at North Gharif are expected to increase throughput for Block 60 in 2025.

Other significant assets include Block 61, a non-associated gas and condensate asset, which contributed about 40% of the Company’s working interest production in 2024. A Field Development Plan is being updated to evaluate the block’s full potential recoverable gas resources for future growth projects.

Block 10, a non-associated gas and condensate asset that started production in 2023, reached production target levels in July 2024. Block 9, an oil and gas asset, accounted for approximately 20% of the Company’s working interest production. Seismic reinterpretation work was undertaken on Block 53, the largest thermal EOR (Enhanced Oil Recovery) project in the Middle East, paving the way for future exploration activities. Block 65, an oil and gas asset that has been operational since late 2022, continued to demonstrate production growth potential.

OQEP retained its exploration assets in Blocks 48, 11 and 47 during the period. It also continued to operate its offshore production contract in Block 8; MGP, an oil and gas processing facility, which processes the production from Block 8 and is well positioned to service new oil and gas discoveries in the Musandam region; and two service agreements for producing areas in Block 6.

The Marsa LNG Bunkering Project commenced construction in Sohar and is running according to the set budget and plan.