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The Productivity Problem In The Permian

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Saudis: American Investors Will Have A Chance To Buy Into Aramco

oil tanker

U.S. investors will have the chance to buy shares of Saudi oil giant Aramco when it launches its initial public offering, Saudi Arabia’s Energy Minister Khalid al-Falih said over the weekend.

Some investors are focused on how much money Aramco will distribute as dividends to shareholders once it goes public, Bloomberg quoted al-Falih as saying at a speech at the MIT in Boston on Saturday.

“We are going to have to face that when we list Aramco and have a conversation about how much cash will be given to investors,” the Saudi energy minister noted.

Earlier this month, reports emerged that it looks like the biggest U.S. hedge and mutual funds—to whom Saudi officials had recently pitched Aramco’s IPO plan in the U.S.—are not very keen on investing in the Saudi oil firm. American investors have reportedly raised three key questions regarding the share sale that is expected to be the world’s most valuable IPO in history. The three issues on which U.S. investors have reportedly expressed doubts are the US$2-trillion valuation, the dividend yield that Aramco would be prepared to hand out to investors, and the expectations that soaring U.S. oil production could continue to suppress oil prices over the next few months and years, according to Bloomberg.

Related: The Truth Behind Oil’s Recent Price Spike

Media reports have also intensified as to whether Saudi Arabia would be seeking an international listing for Aramco. Legal risks and rising oil prices have prompted Riyadh to scale back the IPO plan for Aramco, whose shares will be floated only on the Saudi stock market in 2019, while the government will review at a later stage if an international listing is worth it, The Wall Street Journal reported last week, citing government officials and other sources close to the matter.

A couple of days later, Saudi Arabia continued to stoke the oil market and downplayed reports of scrapping international listing plans, as Saudi Arabia’s Finance Minister Mohammed al-Jadaan told Bloomberg in an interview that the international listing is still on the table—and that London, New York, and Hong Kong are still being considered as potential venues for the deal.

By Tsvetana Paraskova for Oilprice.com

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  • Brian Bresee on March 26 2018 said:
    The Saudi IPO has two very large obstacles within the United States and around the world.

    One, the United States among others have antitrust laws against price fixing, the whole purpose of OPEC of which Saudi Arabia is a key member of.

    Two, the risk of conflict between Saudi Arabia and Iran which is currently being touted as an excuse to raise oil prices is also causing investors to lose interest and therefore devaluing the Saudi IPO.

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