Rare glimpse into Saudi Aramco Reveals $111 billion Gain

Saudi Arabia's Crown Prince Mohammed bin Salman speaks during a meeting with Indian Prime Minister Narendra Modi at Hyderabad House in New Delhi

Saudi Arabia's Crown Prince Mohammed bin Salman speaks during a meeting with Indian Prime Minister Narendra Modi at Hyderabad House in New Delhi

Fitch said that based on information received from Aramco, the planned sale of up to five percent of Aramco through an initial public offering (IPO) still stands and is likely to take place in 2021.

While announcing the deal, Yasir al-Rumayyan, Managing Director of PIF, said in a statement that this deal would unlock notable capital for the continued long-term investment strategy of PIF, underpinning revenue and sectoral diversification for Saudi Arabia. "International bond issuance by Aramco would be a landmark event", M.R. Raghu, research head at the Kuwait Financial Centre, said.

Aramco also dethroned Apple as the world's most profitable firm.

Its 2018 liquids production and its total hydrocarbon production averaged 11.6 million and 13.6 million barrels of oil equivalent per day, respectively, well ahead of the upstream output of global and regional integrated producers such as Abu Dhabi National Oil Company, Royal Dutch Shell, Total SA, and BP.

Aramco will start meeting worldwide bond investors this week for the much anticipated debt transaction.

It comes as Aramco prepares to sell bonds on the worldwide market to help finance the purchase of a 70-percent stake in Saudi petrochemical behemoth SABIC for $69.1 billion, effectively merging the kingdom's two largest companies. As per the investor presentation, the SABIC acquisition would be having no impact on the rating of Aramco.

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Aramco intends to pay for the acquisition in tranches, with 50 percent at the closing of the transaction and the remainder over a two-year period, from internal cash generation and, potentially, other resources, the company said. Moody's issued an A1 rating for Aramco.

Aramco had a net income of $111 billion a year ago.

"This acquisition will strengthen the company's business profile given that downstream assets typically provide countercyclical cash flow benefits", it said in reference to the volatility of oil prices.

The firm is presenting itself to global investors as an "anchor of global energy" and a global energy provider of systemic importance, producing one of every eight barrels of global crude, according to its presentation.

J.P. Morgan and Morgan Stanley were listed as arrangers and dealers for the term note program.

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