For all its wealth, oil giant pays surprisingly little

Article Image Saudi Aramco Poised Make History with IPO Valued Between $1.5-$2 Trillion

Article Image Saudi Aramco Poised Make History with IPO Valued Between $1.5-$2 Trillion

The state-owned company however said there was no decision yet on the second part of the IPO to list on an global stock market, raising doubts that this much-anticipated step will ever happen.

After years of delay, Aramco said it plans to sell an unspecified number of shares on the Riyadh stock exchange, calling it a "historic" milestone for the energy giant which pumps 10 per cent of the world´s oil.

The energy giant has been hit by a recent string of attacks on its oil facilities, the latest and most serious halting the flow of 5.7 million barrels of oil per day - over half of its output - in drone strikes on September 14.

Last year, Aramco made an annual net profit of $111 billion, over a third bigger than the combined net income of the five super majors Exxon Mobil XOM.N , Royal Dutch/Shell RDSa.AS , BP BP.L , Chevron CVX.N and Total TOTF.PA . Having said that, the money generated by going public with Aramco, the country's most prized and profitable jewel, may not contribute enough in the grand scheme to fund Prince Mo plan.

Saudi retail investors will be eligible to receive one share for every 10 allotted shares if they continuously and uninterruptedly hold the shares for 180 days from the first date of trading and listing on the exchange, Aramco said in the statement. But the project was shelved amid concerns about legal complications in the United States, as well as doubts about the USD$2 trillion valuation sought by bin Salman - only to be revived earlier this year after Aramco pulled off a successful global bond sale.

"Aramco is the only oil producer in Saudi Arabia", said Vandana Hari, CEO of the Vandana Insights group of experts, based in Singapore.

Sources have said Aramco could offer 1%-2% of its shares on the local bourse, raising as much as $20 billion-$40 billion.

And then there's Aramco's environmental record.

Credit rating agency Fitch recently downgraded Saudi Arabia's rating from A+ to A, citing "increased geopolitical and military tensions in the Gulf region", in addition to "the vulnerability of Saudi Arabia's economic infrastructure, and continued deterioration in Saudi Arabia's fiscal and external balance sheets".

Sprint Merger Clears FCC Hurdle
Sprint CEO Marcelo Claure (left) and T-Mobile CEO John Legere on the floor of the New York Stock Exchange on April 30, 2018. We'll keep you posted as this merger continues to drag on.

For the people of Saudi Arabia, the IPO is a huge deal. But getting its books ready has taken until now, and bankers have advised that the valuation should instead be around $1.5 trillion. The original plan to list Aramco in either NY or London has been dropped in favour of a Riyadh-only flotation for now.

The listing comes as part of Saudi Crown Prince Mohammed bin Salman plans to diversify the country's economy and create the world's most valuable listed company.

April 24, 2017 HSBC has been formally mandated as an adviser on IPO of Saudi Aramco, HSBC's chief executive said.

The government has reportedly pressed wealthy Saudi families to invest in the IPO and is seeking to ease lending restrictions for ordinary citizens to buy a stake in the company.

March 30, 2017 Saudi Aramco formally appointed JPM, Morgan Stanley and HSBC as worldwide financial advisers for its IPO, sources familiar with the matter tell Reuters.

If Aramco was valued at $2tn, the shares would raise the $100bn (£77bn) the crown prince needs for his ambitious redevelopment plans for Saudi Arabia, where unemployment is more than 10%.

It is a fact that the second-biggest oil reserves are in Saudi Arabia, after Venezuela. Senior leaders "see themselves as stewards of this incredible national resource", she said.

An announcement from the kingdom's Capital Market Authority announcing its approval for the share sale served as a starting gun for an IPO promised by Crown Prince Mohammed bin Salman since 2016.

Recommended News

  • US Formally Announces Withdrawal From Paris Climate Deal, Says Pompeo

    US Formally Announces Withdrawal From Paris Climate Deal, Says Pompeo

    Polls also suggest a large majority of Americans support the U.S. remaining in the Paris deal. Former vice-president Joe Biden called Trump's decision "shameful".
    Emma Watson Opens Up About Her Relationship Status: 'I'm Very Happy'

    Emma Watson Opens Up About Her Relationship Status: 'I'm Very Happy'

    The trendy term is used by some psychologists to help couples "heal" following a break-up. Emma Watson is single, and she's just fine with that, thank you very much .
    Will Sean Spicer Win ‘Dancing With The Stars?’

    Will Sean Spicer Win ‘Dancing With The Stars?’

    The 25-year-old professional dancer, who is partnered with Sean Spicer on DWTS , is putting family first during this hard time. Since the beginning of the season, Spicer has run his appearance on the show like a political campaign.
  • Extra TV umpire likely to check no-balls in IPL 2020

    Extra TV umpire likely to check no-balls in IPL 2020

    One of the instances between Royal Challengers Bangalore and Mumbai Indians saw RCB lose the math as the on-field umpire failed to spot the no-ball - bowled by Lasith Malinga.
    Angelina Jolie evacuated from the set about the reported bomb scare

    Angelina Jolie evacuated from the set about the reported bomb scare

    Production halted as the pros were brought in and the team were taken to a safe distance in case it made a decision to detonate. However, the crew was evacuated until an investigation was completed, and the area was again deemed safe to resume production.
    Keanu Reeves is reportedly dating Alexandra Grant

    Keanu Reeves is reportedly dating Alexandra Grant

    The couple first collaborated in 2011 on Reeves' book Ode to Happiness , with Grant providing the illustrations. Then, just two years later, Syme drover her Jeep into a row of parked cars and was killed in the accident.
  • Kenya Moore on How Marc Daly Relationship Affected RHOA

    Kenya Moore on How Marc Daly Relationship Affected RHOA

    I have a nice coin, I love my bag that I take home at night and feed my son very well. "So I'm not coming for anybody's money". She made such a giant deal about us not being associates, however she's the one who's not associates with folks'.
    Martin Scorsese Slams Marvel In Op-Ed

    Martin Scorsese Slams Marvel In Op-Ed

    He argued this was not the case. " Many franchise films are made by people of considerable talent and artistry". What's not there is revelation, mystery or genuine emotional danger. "Nothing is at risk".
    Sonny Bill Williams 'agrees' to huge $10m deal

    Sonny Bill Williams 'agrees' to huge $10m deal

    Two-time Rugby World Cup victor Sonny Bill Williams will return to rugby league with Super League debutants Toronto Wolfpack. He appeared 73 times for Canterbury and 45 times for Sydney in the National Rugby League in Australia.
  • ‘I’ve had this story for three years’

    ‘I’ve had this story for three years’

    Right-wing activist site Project Veritas published audio it obtained of ABC news anchor Amy Robach on Tuesday. Robach herself also said the interview to which she was referring in the video was uncorroborated.
    Inside P.J. Fleck's new deal -- salary structure, buyouts, etc.

    Inside P.J. Fleck's new deal -- salary structure, buyouts, etc.

    The Gophers host fellow unbeaten Penn State on Saturday now have a two-game lead in the Big Ten East division. Fleck, 38, originally signed a five-year, $18 million base contract .
    Police, lawyers clash over parking spot

    Police, lawyers clash over parking spot

    The messages, first circulated around 4 p.m. on Monday, permeated several police groups on social media within hours. FIR has been lodged regarding yesterday's incident at Saket Court and appropriate legal action is being taken.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.