An independent audit of the crude oil reserve base of Saudi Aramco is expected to result in a slight upward revision of the Kingdom’s oil wealth, Reuters reports, citing a source with knowledge on the matter.
The audit is part of preparatory work ahead of Aramco’s once highly anticipated and now indefinitely delayed initial public offering.
For the last three decades, the Saudi major has been reporting the same number for its reserves, at 261 billion barrels, as per BP calculations. However, now that Aramco is preparing to become a public company, transparency is required about its financial performance and reserve base, hence the independent audit.
An earlier Reuters report from April 2018 said the audit was expected to conclude Aramco’s reserves were slightly higher than 261 billion barrels, again based on information from unnamed sources.
One of these told Reuters the company’s reserve base was “more than confirmed”, with another adding “This is good for the company’s valuation.” These source said the reserve base of the company would be calculated at 270 billion barrels.
Riyadh claims Aramco is worth US$2 trillion, which would mean the floating of 5 percent of the company would bring in US$100 billion. However, external calculations have challenged the numbers on the grounds that Aramco’s valuation is inevitably tied to oil prices and these are not stationary, among other things such as investor trust in the company, which is notoriously opaque not only about its reserves but also its financial performance.
The audit is being conducted by companies including DeGolyer and MacNaughton, and Baker Hughes’ Gaffney, Cline, and Associates. It was initially planned to be completed by the end of 2017 but the job proved too complex to keep this deadline. With the IPO date delayed more than once, there has obviously been no great rush to finish the audit.
Now, the results are slated to be released later today, the Reuters source said.
By Irina Slav for Oilprice.com
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