Giant Oil Company Saudi Aramco to list 5 per cent of its shares in 2018

Hello there !!

Saudi Arabia’s leading oil company giant Saudi Aramco, which pumps more than 10 per cent of the world’s crude, is preparing to list 5 per cent of its shares in 2018. Bankers will flock to Saudi Arabia this weekend to pitch for a role in the multitrillion-dollar listing of the state-owned oil giant.  Saudi Aramco offers the prospect of hundreds of millions of dollars in fees for those advising on and managing the listing slated to be the biggest ever. Officials have claimed the float could value at more than $2 trillion, making it the largest business in the world followed by Apple, at about $614 billion.

 

But while everyone believes Saudi Arabia has some of the largest oil reserves in the world, perhaps rivaled only by Venezuela, there has been a lot of uncertainty and skepticism over exactly how much sits beneath the Saudi desert. The world’s largest oil field, Ghawar, has been producing since the 1950s, raising speculation about the longevity of the supergiant oilfield. It alone is thought to hold around 75 billion barrels, and it churns out more than 5 million barrels every single day.

Surely, it cannot continue like this indefinitely, but the Kingdom has not revised its official reserves for years, which have stood at 260 billion barrels since the 1980s. It is hard to overstate how valuable this information is, and how fiercely Saudi leadership protected it.However, the collapse of oil prices since 2014 has pushed the Saudi budget deep into the red. The Deputy Crown Prince Mohammed bin Salman is undergoing a historic transformation of the Saudi economy, a multi-decade plan to diversify the country’s economic base and create new sources of revenue. At the heart of the plan is spinning off roughly 5 percent of Saudi Aramco, the most valuable oil company in the world.

But in order to settle on a valuation and launch an IPO of some of Aramco’s assets, investors need to get a look beneath the hood. That is why Saudi Arabia is now prepared to unveil not just its financials, but also the long sought after data surrounding its oil reserves. “Everything that Saudi Aramco has, that will be shared, that will be verified by independent third parties,” Khalid al-Falih, Saudi Arabia’s energy minister, told the Financial Times in an interview. That would include, “reserves… costs .. profitability indicators.” He went to lengths to emphasize Saudi Arabia’s seriousness about the IPO, in an effort to dampen skepticism. “This is going to be the most transparent national oil company listing of all time,” he said. Officials believe that the company is worth between $2 and $3 trillion.

Source: http://oilprice.com/Energy/Crude-Oil/Are-The-Saudis-About-To-Reveal-The-Best-Kept-Secret-In-Oil.html

By Nick Cunningham