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Saudi Aramco Says It’s Ready For The IPO

Saudi oil giant Aramco is ready for listing, but it will be the company’s only shareholder, the Kingdom of Saudi Arabia, that will decide when the timing for the much-hyped initial public offering (IPO) will take place, the world’s largest oil producing firm said on Monday.  

“We will announce (the IPO) depending on their (the government’s) perception on what would be the optimum market condition,” Reuters quoted Khalid al-Dabbagh, Aramco’s senior vice president of Finance, Strategy & Development, as saying on the earnings call today.

The Saudi oil giant reported first-half financials for the first time on Monday, announcing a net profit of US$46.9 billion, down by 12 percent from US$53 billion for the first half of 2018, due to lower oil prices this year.  

Earlier this year, Aramco, which pumps all the crude in the world’s largest oil exporter Saudi Arabia, said that it would reveal first-half figures and hold its first-ever earnings call as part of its debut international bond. The Kingdom is also trying to woo investors by revealing financials for the first time as it continues to work on listing 5 percent in its oil giant company.

Initially announced in 2016, the plans for Saudi Aramco’s IPO have faced multiple delays and various stumbling blocks, including a US$2-trillion valuation that the Saudis are hoping for, the estimate of Saudi Arabia’s oil reserves that has been shrouded in secrecy, and the international venue for the IPO.

Related: Will Shale Rise From The Dead?

Saudi Arabia is working to have Aramco listed on a stock market as early as at the beginning of 2020, The Wall Street Journal reported last week, quoting people close to the talks.  

Saudi officials—who have so far vaguely given a timeline in 2020 or 2021—are now reportedly hoping to use the positive market sentiment from Aramco’s first international bond sale in April.

In June this year, Saudi Crown Prince Mohammed bin Salman said that Aramco’s IPO is going ahead as planned and is on track for 2020 or 2021.

Mohammed bin Salman is reportedly still holding fast to the notion that Saudi Aramco should be valued at US$2 trillion, while analysts remain skeptical that the world’s largest oil company is truly worth that much.  

By Tsvetana Paraskova for Oilprice.com

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