Article image Saudi Aramco confirms plans to list on Riyadh bourse

Monday, 04 Nov, 2019

Its disclosures show that it costs Aramco $2.80 to get a barrel of oil from the ground, which it can then sell for $62 per barrel, according to The Guardian.

Chinese e-commerce giant Alibaba still holds the record with a United States dollars 25 billion IPO in NY in 2014. "So far it's only on Tadawul", Aramco chair Yasir al-Rumayyan told a media conference, referring to the Saudi stock exchange.

"You're basically a rock star if you work for Aramco", energy expert Jim Krane said.

"It allows Prince Mohammed to show he keeps his promises and gets things done, another step to reassure worldwide investors that the IPO will happen after all", Bianco said.

"Pressuring rich Saudis, many of whom were imprisoned at the Ritz, to invest in the Aramco IPO and to hold on to the shares is basically coercion", Wald said.

JPMorgan Chase & Co. published a 118-page report without offering a valuation, but called Aramco the first "mega-major" oil company.

Investors will also have to weigh up how to factor in heightened geopolitical risks after attacks in September on Aramco's crude-processing facilities knocked out half of its production.

Aramco's status as the world's mightiest oil company comes as concerns about climate change have raised doubt about the future of fossil fuels. It said its net income as of the end of the third quarter this year was $68 billion.

Chief Executive Amin Nasser said at the news conference that Aramco plans to release the prospectus on November 9.

Based on that, Saudi Arabia may choose to rely on local investors to push up the price of the stock, Raja said.

The Saudi stock market fell 2% on Sunday after the announcement.

Analysts believe as much as 3% of the world's largest oil and gas company will initially be listed on Tadawul.

Saudi investors would be eligible to receive bonus shares - a maximum of 100 bonus shares for every 10 allotted shares.

"I think this is the right time for us", he stated.

Saudi Arabia's state energy company, Aramco, is expected to make its stock market debut in December after regulators approved what would be the the world's biggest ever initial public offering.

March 27, 2019 - Saudi Aramco says it would buy SABIC in $69 billion chemicals mega deal.

In May, fellow oil producer Norway's $1tn sovereign wealth fund said it expected to sell some of its oil and gas holdings, albeit to make it less reliant on price swings in the commodity.

Initial hopes for a blockbuster global listing of about 5 per cent were dashed when the share sale was halted previous year amid debate over where to list Aramco overseas.

That said, Aramco's IPO may well fall short of Saudi Arabia's own expectations.

The listing forms the cornerstone of Prince Mohammed's ambitious plans to transform the Arab world´s biggest economy.

"As the process has been delayed repeatedly and built up as such an integral component of the crown prince's plan to transform Saudi Arabia, worldwide investors will pay very close attention to how Aramco performs on the domestic exchange", Ulrichsen told AFP.

The listing announcement had been expected on October 20 but was delayed after advisers said they needed more time to lock in cornerstone investors, three sources told Reuters. The new rates are above previous ones on higher oil prices.

Its 2018 net profit of $111.1 billion is higher than the profits of Apple, Google and Exxon Mobil combined. A presentation posted to Aramco's website last month announced the intent to offer a $75 billion dividend for investors in 2020. At $1.8 trillion that would mean a yield of 4.4 per cent, a decent payout in a low-interest-rate world, but still lower than the 5 per cent Exxon investors now get.