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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsShock, Laughter Greet Plan for Saudi Arabia's Record Oil IPO
When one financial adviser heard about Saudi Arabias plans to list a company larger than the economies of most nations, he had to pull over his car because he was laughing so hard.
Saudi Arabian Oil Co., or Aramco, the worlds largest oil producer, said Friday its considering an initial public offering. It confirmed an interview with Deputy Crown Prince Mohammad bin Salman published in the Economist Thursday. The news was greeted with incredulity in the financial industry, according to interviews with a half dozen bankers who do business in the Middle East. They asked not to be identified to protect their business interests.
For one thing, Aramcos inner workings are opaque, making its true value a mystery. Then theres the timing. The price of crude oil is near its lowest level in more than a decade. Discussions with Aramco about selling assets in the past had been about much smaller parts of the business, five of the people said. An initial public offering of the entire enterprise had only ever been discussed as a joke, one of the people said.
The company could be worth anything from $1 trillion to upwards of $10 trillion, which would make it the most valuable company in the world, according to a note from Jason Tuvey at research firm Capital Economics. The last mega IPO from the oil industry was a decade ago, when Russias OAO Rosneft raised more than $10 billion.
http://www.bloomberg.com/news/articles/2016-01-08/shock-laughter-greet-plan-for-saudi-arabian-sale-of-the-century
sharp_stick
(14,400 posts)I'd love to see the balance sheet of that company. You know the payoffs and bribes are immense.
leveymg
(36,418 posts)Crude had fallen to $10/bbl. That's also the time that the Saudi Royal Family split into two competing factions. The privatization scheme died in obscurity, but al-Qaeda got a major boost after UBLs Fatwah. Something major is happening again.
elehhhhna
(32,076 posts)Hard to value the company.
RandySF
(58,513 posts)The new king fired his nephews and put his own immediate family in charge.
leveymg
(36,418 posts)Gumboot
(531 posts)The house of Saud / Bush / cards is looking very shaky these days.
Oil price still tumbling... Jeb polling at approx 5%...
BlueSpot
(855 posts)There is a global glut of oil which you've probably noticed at your local gas station. Oil storage in the U.S. is at record or near record levels - I haven't looked lately. The Saudi's have continued to produce crude at their usual levels in an effort to bankrupt U.S. producers. They're (U.S. producers) fracking which is a whole another thing and I'm not going there for this. The base fact is that the U.S. is producing a lot of oil.
The net effect is that prices for crude continue to erode or at least stay low. At the same time, U.S. producers have become more efficient so they are more able to accept the lower prices than originally expected. I don't know what Saudi oil production costs are but this little price war they've been staging for the past couple of years may have resulted in an operating cash shortage at home. A successful IPO could buy them more time. It will be interesting to see how it plays out.
Of course I can only watch because I sure can't influence it.
If Jeb influences things beyond the basic fundamentals, I don't know. But I don't attribute the price of oil in any way to his poll numbers. It's just supply and demand economics as far as I can tell.
RandySF
(58,513 posts)shutting down the more expensive operations in places like the Arctic.
TransitJohn
(6,932 posts)They expected to shut down American production by now and to be siphoning our dollars away again. Not working out for them.