Would you like to buy an Oil company?

[Mega]

Saudi Arabia confirms scheme to list Aramco, world's largest oil producer

Saudi Aramco controls world's largest oil fields and would raise much-needed funds for the kingdom




Saudi Aramco manages more than 100 oil and gas fields in Saudi Arabia Photo: Alamy









By Andrew Trotman

1:20PM GMT 08 Jan 2016
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Saudi Arabia is considering floating state-owned Saudi Aramco, the world's largest oil producer, on the stock market.


The company is looking at whether to list “an appropriate percentage” of shares of the parent or a bundle of units "to allow broad public participation in its equity", it said on Friday.


If the initial public offering goes ahead, Aramco could rival Apple, which has a market value of about $530bn, as the world’s biggest listed company. Opening it up to investors would be the most dramatic change in the kingdom’s economic policy since it adopted nationalisation in the 1970s.


The proposal for an IPO is consistent with the kingdom’s direction for reforms, including privatisation of various sectors of the Saudi economy and deregulation of markets, Aramco said. Bringing in investors would also strengthen the company’s focus on long-term growth and the prudent management of its reserves, it said.


Earlier this week, Muhammad bin Salman Al Saud, the kingdom’s deputy crown prince, said a final decision on the multi-trillion-dollar company would be taken in the next few months as part of a "Thatcherite revolution" in the stumbling economy.


“Personally I’m enthusiastic about this step. I believe it is in the interest of the Saudi market, and it is in the interest of Aramco,” he told The Economist.
Prince Muhammed has reportedly held "high-level meetings" on the subject, which focused on whether to sell off some of its petrochemical and other “downstream” firms, as well as listing stock in the parent company, which includes the oil-producing unit.
Muhammad bin Salman Al Saud
According to The Economist, 5pc of Saudi Aramco could initially be floated in Riyadh. That amount would then rise, but the kingdom would retain control.

Saudi Aramco is headquartered in Dhahran, but it has a global reach with interests in exploration, production, refining, chemicals, distribution and marketing.

The company manages more than 100 oil and gas fields in Saudi Arabia and produced 3.4bn barrels of oil in 2013. It also operates the Ghawar Field, the world's largest onshore oil field, and the Safaniya Field, the world's largest offshore oil field.

Once the various options for the company have been reviewed, the findings will be presented to the company’s board of directors, which will make recommendations to Aramco’s supreme council.

[lektrode]

Re: Would you like to buy an Oil company?

my 2 'initial public offerings' as the 'theme songs' for this
(as well as comments-in-general about whats occurred since the summer of '08):


ON YER MARK!
READY?
SET?
GO!


LOCK AND LOAD!



(edit: it occurred to me after posting this, that the below is THE 'theme song' - even if the above is a more...uhhh... 'stimulating' tune, tho the lyrics dont quite get to my point...)

[GRG55]

Re: Would you like to buy an Oil company?

Saudi Arabia confirms scheme to list Aramco, world's largest oil producer

Saudi Aramco controls world's largest oil fields and would raise much-needed funds for the kingdom

...

Saudi Arabia has long depended on funds from Saudi Aramco for a major portion of its budget revenue. Aramco in turn has to submit its annual budgets to the government in order to get some of those funds allotted back to invest as maintenance and development capital. During past cyclical lows in the oil price the government has borrowed to meet its budget shortfall (which it is doing again today) and significantly cuts Aramco's capital allocation.

From expats I know that work for Aramco and live in Saudi, as of New Year there had not been any significant staff reductions (the expats are generally first to have their jobs eliminated and they have to move home or elsewhere). No staff reductions means Aramco expects to find some way to fund its capital budget this year. Now we know how. Aramco won't get all of the IPO proceeds, but is likely needing this in the absence of an adequate allocation from current government general revenues to maintain production volumes.

As for 5% floated on the Saudi stock exchange, that would also follow the typical pattern of Middle East stock markets...a very small percentage of the company is in the public float, the government or family still controls the company. Like China, these exchanges are havens for speculators with foreign ownership restrictions, limited public floats, too many poor quality companies, immature market regulations, few knowledgeable investors and too many of those making heavy use of leverage. However, putting Aramco in the mix should be of some help in addressing some of this.

[Mega]

Re: Would you like to buy an Oil company?

Sorry to be all "George Berard Shaw"...........but you said a lot without forming a conclusion.

WOULD YOU BUY THEIR STOCK?

Thanks
Mike

[GRG55]

Re: Would you like to buy an Oil company?

Sorry to be all "George Berard Shaw"...........but you said a lot without forming a conclusion.

WOULD YOU BUY THEIR STOCK?

Thanks
Mike

If it is floated on the Saudi exchange in Riyadh you will probably have to be a Saudi citizen to buy it, so it's a moot point.

[Mega]

Re: Would you like to buy an Oil company?

................& if it was floated in London?

[GRG55]

Re: Would you like to buy an Oil company?

................& if it was floated in London?

LOL

There is a greater chance that you will convert to Islam before Saudi Aramco is listed in London.



Exhibit 1; From the article YOU posted:

"...Earlier this week, Muhammad bin Salman Al Saud, the kingdom’s deputy crown prince, said a final decision on the multi-trillion-dollar company would be taken in the next few months as part of a "Thatcherite revolution" in the stumbling economy.

“Personally I’m enthusiastic about this step. I believe it is in the interest of the Saudi market, and it is in the interest of Aramco,” he told The Economist..."

Exhibit 2; SABIC, the giant Saudi government controlled petrochemical company, owns operating plants in the Netherlands, Germany and the UK (it took over the assets of Huntsman Corporation in 2007) as well as China. Despite being the largest listed Middle East company it trades only on the Saudi exchange and private share ownership is restricted to Saudi and other GCC citizens only. Why would you expect them to treat Aramco any differently?

Exhibit 3; Seriously, do you really expect a Saudi government owned company to allow itself to be subjected to the disclosure and transparency requirements of the London Stock Exchange and the Bank of England in its regulatory capacity? After all the Saudis are so open about everything else, eh.

Stop wasting your time Mike.

Edit added: Recognize what is really going on here...the government owned oil company assets are being distributed to the wealthy and influential in the country (and region) AFTER those assets have fallen dramatically in value. It is an age old game. Do you really think Prince Alwaleed bin Talal (Kingdom Holdings) made his enormous and rapid fortune because of extraordinary business acumen?

[lakedaemonian]

Re: Would you like to buy an Oil company?

Edit added: Recognize what is really going on here...the government owned oil company assets are being distributed to the wealthy and influential in the country (and region) AFTER those assets have fallen dramatically in value. It is an age old game. Do you really think Prince Alwaleed bin Talal (Kingdom Holdings) made his enormous and rapid fortune because of extraordinary business acumen?

I wonder how much this compares to Pre-revolutionary Iran corruption?

Even IF a share float was accessible to foreigners I'd be worried about more than just the opacity of real operational/financial results and political interference.

I'd be worried about long term stability and legitimacy.

It's THE prize and cash cow and the first thing to be seized, nationalised, or just diluted into oblivion.

-----

I mentioned before an interest in knowing say travel/visa data for GCC middle class citizens for any trends setting up bolt holes.

It would also be interesting to see if the Saudi share market float expands to include trends like Aramco owned foreign asset sell-offs to GCC insiders to further festher their foreign bolt hole nests.

Indicators of rats leaving a sinking ship...........or at least indicators of iceberg and lifeboat insurance popularity.

[photon555]

Re: Would you like to buy an Oil company?

I wonder how much this compares to Pre-revolutionary Iran corruption?

Even IF a share float was accessible to foreigners I'd be worried about more than just the opacity of real operational/financial results and political interference.

I'd be worried about long term stability and legitimacy.

It's THE prize and cash cow and the first thing to be seized, nationalised, or just diluted into oblivion.

-----

I mentioned before an interest in knowing say travel/visa data for GCC middle class citizens for any trends setting up bolt holes.

It would also be interesting to see if the Saudi share market float expands to include trends like Aramco owned foreign asset sell-offs to GCC insiders to further festher their foreign bolt hole nests.

Indicators of rats leaving a sinking ship...........or at least indicators of iceberg and lifeboat insurance popularity.

Seems like the major shareholders anticipate further weakness in the energy sector and want to cash in at least some of their ownership stake. What do they know, and when did they know it? This may be like buying a new house in 2007, with zero down! Hope the suckers, er... investors have another shirt.

[jk]

Re: Would you like to buy an Oil company?

Seems like the major shareholders anticipate further weakness in the energy sector and want to cash in at least some of their ownership stake. What do they know, and when did they know it? This may be like buying a new house in 2007, with zero down! Hope the suckers, er... investors have another shirt.

Perhaps, but it is at least as likely that it's a cash flow/liquidity issue.

[lakedaemonian]

Re: Would you like to buy an Oil company?

Seems like the major shareholders anticipate further weakness in the energy sector and want to cash in at least some of their ownership stake. What do they know, and when did they know it? This may be like buying a new house in 2007, with zero down! Hope the suckers, er... investors have another shirt.

This is where I definitely defer to GRG55.

I'm mostly interested in any potential indicators of high level connected folks shifting to cash/assets held in the west or maybe increasingly in places like UAE, Hong King, or Singapore.

Followed by any visa/emigration trends amongst lower order affluent.

Pre revolution Iran had a lot of capital flight, Afghanistan had a lot of capital flight a few years back when I was there with some comical stories around gold as carry-on luggage from Kabul to Dubai.

I'll be very interested about any Saudi capital flight anecdotes or trends.