OQ’s $10 bn outstanding debt within safe limits: Group CEO
Published: 02:11 PM,Nov 27,2023 | EDITED : 06:11 PM,Nov 27,2023
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MUSCAT: OQ, the global integrated energy group of the Sultanate of Oman, says its outstanding debt – presently amounting to $10.6 billion as of end-2022 – is well within prudent bounds.
Group CEO Talal al Awfi said the Group’s assets of $31 billion ensure ample financial stability for the wholly government-owned conglomerate, part of Oman Investment Authority (OIA).
“It is essential to highlight that as of 2022, OQ holds over USD 31 billion in assets, positioning us strongly in terms of financial stability,” the Group CEO said in an interview featured in the latest edition of Enjay & Eejaz, the quarterly newsletter of OIA.
“With a total outstanding debt of $10.6 billion, we have achieved a favorable debt-to-equity ratio of 0.78:1. This, coupled with our substantial annual profits, showcases our effective debt management, reinforcing our financial stability and continuous commitment to value creation.”
In the interview, Al Awfi affirmed OQ’s commitment to “honoring its commitments to its debt creditors”. He underlined the importance of debt as a “common financing tool” adopted by local and international energy companies alike to finance their projects and operations.
OQ, for its part, has taken steps to significantly reduce its debt through a balance sheet optimization initiative, said the Group CEO. “This initiative led to an upgrade in OQ’s standalone credit profile from b+ to bbb- in July 2023. These actions underscore our proactive approach to financial management and reinforce our strong financial position,” he added.
In revising up OQ’s standalone credit profile (SCP), international ratings agency Fitch Ratings cited four criteria: Material debt reduction and sharply lower EBITDA net leverage; Greatly reduced subordination and improved access to cash flow within the group structure; Establishment of a financial policy; and Improved scale and integration.
During the first half of this year, OQ Group recorded EBITDA (earnings before interest, taxes, depreciation and amortization) of about $2.3 billion with net profits amounting to $1.1 billion, and recorded assets worth $31.2 billion.
The Group also reported a 7 per cent increase in total oil production from assets operated by it and by investment partnerships to about 222k bpd during H1 2023. Production from its flagship upstream asset, Block 60, climbed to 61k barrels of oil equivalent per day, compared to 49k barrels of oil equivalent in the first half of 2022. Natural gas production reached 471 million cubic feet per, of which 18 million cubic feet per day of gas came from assets operated by OQ.
OQ’s Board and shareholders have also approved the partial divestment of a 40 per cent interest in Block 60, as well as its exploration license, Block 48. The transaction, stemming from a sale-purchase agreement signed on August 22, 2023, is currently awaiting approval from the regulatory authorities.
Group CEO Talal al Awfi said the Group’s assets of $31 billion ensure ample financial stability for the wholly government-owned conglomerate, part of Oman Investment Authority (OIA).
“It is essential to highlight that as of 2022, OQ holds over USD 31 billion in assets, positioning us strongly in terms of financial stability,” the Group CEO said in an interview featured in the latest edition of Enjay & Eejaz, the quarterly newsletter of OIA.
“With a total outstanding debt of $10.6 billion, we have achieved a favorable debt-to-equity ratio of 0.78:1. This, coupled with our substantial annual profits, showcases our effective debt management, reinforcing our financial stability and continuous commitment to value creation.”
In the interview, Al Awfi affirmed OQ’s commitment to “honoring its commitments to its debt creditors”. He underlined the importance of debt as a “common financing tool” adopted by local and international energy companies alike to finance their projects and operations.
OQ, for its part, has taken steps to significantly reduce its debt through a balance sheet optimization initiative, said the Group CEO. “This initiative led to an upgrade in OQ’s standalone credit profile from b+ to bbb- in July 2023. These actions underscore our proactive approach to financial management and reinforce our strong financial position,” he added.
In revising up OQ’s standalone credit profile (SCP), international ratings agency Fitch Ratings cited four criteria: Material debt reduction and sharply lower EBITDA net leverage; Greatly reduced subordination and improved access to cash flow within the group structure; Establishment of a financial policy; and Improved scale and integration.
During the first half of this year, OQ Group recorded EBITDA (earnings before interest, taxes, depreciation and amortization) of about $2.3 billion with net profits amounting to $1.1 billion, and recorded assets worth $31.2 billion.
The Group also reported a 7 per cent increase in total oil production from assets operated by it and by investment partnerships to about 222k bpd during H1 2023. Production from its flagship upstream asset, Block 60, climbed to 61k barrels of oil equivalent per day, compared to 49k barrels of oil equivalent in the first half of 2022. Natural gas production reached 471 million cubic feet per, of which 18 million cubic feet per day of gas came from assets operated by OQ.
OQ’s Board and shareholders have also approved the partial divestment of a 40 per cent interest in Block 60, as well as its exploration license, Block 48. The transaction, stemming from a sale-purchase agreement signed on August 22, 2023, is currently awaiting approval from the regulatory authorities.