Muscat – S&P Global has assigned an investment-grade ‘BBB-‘ long-term issuer credit rating to OQ Exploration and Production (OQ E&P) with a stable outlook, citing the company’s resilient financial profile, stable hydrocarbon production and strategic importance to parent company OQ.

The ratings agency also assigned OQ E&P a ‘gcAA-‘ Gulf Cooperation Council regional scale rating.

S&P said the stable outlook reflects its expectation that OQ E&P will maintain strong credit metrics through 2026 and 2027, supported by steady production, long-term exploration and production sharing agreements (EPSAs) and a policy of maintaining net debt to EBITDA below 1.0x under normal market conditions.

The agency considers OQ E&P a core subsidiary of OQ, which retains a 75% stake following the company’s 2024 initial public offering on the Muscat Stock Exchange. OQ E&P contributes between 45% and 60% of the group’s EBITDA and plays a key role in generating cash flows that support OQ’s investment strategy, including its transition towards lower-carbon businesses.

S&P noted that OQ E&P benefits from preferential rights to participate in new upstream blocks as the Omani government’s partner, an 11-year proved and probable reserve life at the end of 2025 and long-term EPSAs that provide cost recovery mechanisms and support stable cash flows.

The agency also highlighted Oman’s strategic advantage, noting that the country’s crude oil exports are shipped primarily through Mina Al Fahal on the Arabian Sea, bypassing the Strait of Hormuz. This reduces exposure to disruptions affecting regional shipping routes, although S&P expects periodic geopolitical instability to persist through the remainder of 2026.

Despite these strengths, S&P said OQ E&P’s business risk profile remains constrained by its concentration in Oman, midsized scale and continued exposure to oil price volatility.

The agency expects the company to maintain production of 220,000-230,000 barrels of oil equivalent per day between 2026 and 2028. More than 75% of its 2025 revenue came from oil and condensate sales, while long-term US dollar-denominated gas supply contracts with Integrated Gas Co. provide a stable source of revenue.

S&P forecasts that OQ E&P will continue to generate positive free operating cash flow despite ongoing investment in its asset base. Capital expenditure is expected to reach RO320mn-RO350mn this year before easing to RO290mn-RO320mn in 2027, including investment in the Marsa LNG project.

Mahmoud bin Abdullah Al Hashmi, Chief Executive Officer, OQ E&P, described the investment-grade ratings as a significant milestone for the company.

“Obtaining these investment-grade credit ratings from a prestigious international agency reflects confidence in the strength of our financial and operational performance, the efficiency of our business model and our ability to generate sustainable cash flows under different market conditions.”

He said the ratings would enhance OQ E&P’s standing in international financial markets and support the company’s long-term growth strategy.