Fitch Ratings has assigned OQ Exploration and Production SAOG (OQEP) a senior unsecured rating of ‘BBB-‘ and an expected ‘BBB-(EXP)’ rating to its trust certificate issuance programme. The rating reflects the agency’s assessment of OQEP’s standalone credit profile and its status as a state-owned oil and gas producer in Oman.
Rating Rationale for OQEP Sukuk
The rating for the sukuk programme is aligned with OQEP’s Long-Term Issuer Default Rating (IDR) of ‘BBB-‘. According to Fitch Ratings, this alignment is based on the agency’s view that a default on the senior unsecured obligations would signify a default by OQEP itself. The rating does not account for the underlying assets or collateral, as the trustee’s ability to pay depends on OQEP’s ability to satisfy its payment obligations under the transaction documents.
The programme is issued through OQEP Sukuk Limited, a special-purpose vehicle incorporated in the Cayman Islands. OQEP acts as the obligor, seller, lessee, buyer, and servicing agent. Tradersunion.com reports that the programme is designed to facilitate general corporate funding for the Omani oil and gas entity.
Financial Obligations and Asset Tangibility
OQEP is required to maintain a tangible asset ratio of more than 50% throughout the life of the trust certificates. If this ratio drops below 33%, a "tangibility event" is triggered, allowing certificate holders to delist the certificates and opt for redemption. Fitch Ratings expects the ratio to remain above the 50% threshold, noting that USD 565 million in unencumbered tangible assets from the first half of 2026 will be allocated to the initial drawdown.
The structure includes several protective covenants, including a negative pledge, cross-default, and cross-acceleration clauses. In the event of bankruptcy or insolvency, the payment obligations of OQEP rank at least pari passu with all other present and future unsecured and unsubordinated obligations.
Liquidity and Market Position
As of March 2026, OQEP held OMR 167 million in cash and maintained access to an undrawn OMR 173 million revolving credit facility. The company’s debt structure includes a USD 500 million bridge-to-bond facility due in September 2027 and an Islamic finance facility of the same amount, which begins amortization in 2027.
OQEP produced 224,000 barrels of oil equivalent per day in 2025, with a production mix of 54% oil and 46% gas. Fitch Ratings notes that the company’s credit profile is linked to its parent company, OQ S.A.O.C., which also carries a ‘BBB-/Stable’ rating.
Frequently Asked Questions
What happens if the tangibility ratio falls too low?
If the tangible asset ratio falls below 33%, it triggers a "tangibility event." Under these terms, the trust certificates will be delisted, and holders have the option to redeem their certificates at the dissolution distribution amount.
Does the rating consider Sharia compliance?
No. Fitch Ratings explicitly stated that it does not express an opinion on the trust certificates’ compliance with Sharia principles when assigning the credit ratings.
What is the purpose of the OQEP Sukuk Limited entity?
OQEP Sukuk Limited is an exempted company with limited liability incorporated in the Cayman Islands. It was established solely as a special-purpose vehicle to participate in the transactions outlined in the sukuk programme documentation.
How does the parent company affect the rating?
OQEP’s rating is based on its standalone credit profile, which is at the same level as the IDR of its parent company, OQ S.A.O.C. Negative rating actions taken against the parent company would be replicated in the rating for OQEP.
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