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Saudi Arabia Oil Minister Says Full Aramco IPO on Track for 2018

Saudi Arabia is still aiming to complete both international and domestic portions of the initial public offering of its state oil company in 2018, Oil Minister Khalid Al-Falih said Tuesday.

Asked whether both parts of the IPO will happen next year, Al-Falih said: “Yes of course; it is on track.” He declined to answer questions on whether Chinese investors were interested in buying ahead of the IPO as cornerstone investors.

People familiar with the situation said last week that the kingdom is wondering whether to delay the international portion of the offering until at least 2019. A two-stage Saudi Aramco IPO is one of several options being considered, they said, asking not to be identified because discussions are private. Another plan would include listing in Riyadh next year and privately selling a stake to one or several cornerstone investors, one of the people said.

There’s a precedent for bringing in such investors before a large commodities IPO. In 2009, Glencore Plc sold a stake through a convertible bond ahead of its 2011 offering, still the largest in London, where the company raised almost $10 billion.

The Saudi government has said the sale of 5 percent of Aramco shares could value the company at as much as $2 trillion, though analysts have tended to give lower estimates. If Saudi Arabia achieves its valuation, that stake would raise about $100 billion, eclipsing Alibaba Group Holding Ltd.’s $25 billion in 2014.

The IPO is the centerpiece of a broad-ranging economic reform program proposed by Crown Prince Mohammed bin Salman, the dominant political force in the kingdom. Any delay would be a setback to his plans and to the plethora of international investment banks and exchanges eyeing millions in fees and commissions.

Exchanges in London and New York are vying for a role in Aramco’s IPO, with Hong Kong, Singapore, Tokyo and Toronto also trying to attract the sale.

“We will announce the venue in due course,” Al-Falih said in London, where he was attending the annual dinner of the Oil & Money conference.

bloomberg



36 Comments on "Saudi Arabia Oil Minister Says Full Aramco IPO on Track for 2018"

  1. joe on Sat, 21st Oct 2017 8:10 am 

    I hope Israel buys up every share they can.

  2. makati1 on Sat, 21st Oct 2017 8:15 am 

    I suspect that china is going to be the big buyer. IF it even happens. So many “ifs”. We shall see.

  3. onlooker on Sat, 21st Oct 2017 9:53 am 

    This is something which must be interpreted as Twilight in the Desert ala Mathew Simmons. No way that KSA would have done this years back. This creates a situation whereby the shareholders can override potentially KSA and do as they wish with the Oil of Saudi Aramco. It also means obviously sharing the profits. This has the hallmark of a Scam as Saudi knows that the days of lucrative Oil sales is gone and only huge expenses and a precarious and unpredictable Oil market lie ahead. Just time from their vantage point they are “dumping” this asset into the public domain.

  4. Sissyfuss on Sat, 21st Oct 2017 11:10 am 

    The IPO is starting to resemble cold fusion, always just a few years away.

  5. MASTERMIND on Sat, 21st Oct 2017 11:11 am 

    Saudi Arabian oil reserves are overstated by 40% – Wikileaks

    https://www.theguardian.com/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

    I wouldn’t touch his IPO with a ten foot Saudi Beheader blade.

  6. MASTERMIND on Sat, 21st Oct 2017 12:46 pm 

    makati1 what do you not understand about the peer reviewed studies I posted? They all conclude Global COLLAPSE…If there was any chance of Asia surviving then they would have just concluded a western world collapse.

  7. Cloggie on Sat, 21st Oct 2017 1:00 pm 

    I hope Israel buys up every share they can.

    Just a Fed phone call away. Or the Pentagon.

    https://www.youtube.com/watch?v=IVpSBUgbxBU

  8. Boat on Sat, 21st Oct 2017 4:07 pm 

    After a record breaking year in 2016 for solar PV, the IEA overhauled its forecast for the next five years, significantly raising the projected growth profile for renewable energy.

    In its new report, Renewables 2017, the IEA argued that it now sees renewable energy as a serious global force, increasingly taking market share away from coal and natural gas. The Paris-based energy agency cited 2016 as a watershed moment, a year in which 164 gigawatts of new renewable energy capacity came online around the world, more than triple the amount of new gas-fired power plants, and more than twice the volume of coal.
    ………………………………….

    Moreover, the pace at which renewables will come online is breathtaking. “We see renewables growing by about 1,000 GW (gigawatts) by 2022, which equals about half of the current global capacity in coal power, which took 80 years to build,” Birol said in a statement.

    https://oilprice.com/Alternative-Energy/Renewable-Energy/IEA-Era-Of-Expensive-Renewables-Is-Over.html

  9. rockman on Sat, 21st Oct 2017 4:44 pm 

    Looker – “This creates a situation whereby the shareholders can override potentially KSA and do as they wish with the Oil of Saudi Aramco.” I’m guessing you’ve never owned stock in a US public company or if you did never attended the annual shareholder meeting. Even if the entire 5% of the Aramco stock placed is owned by one person they would have ZERO say in how Aramco is run. Same if someone owned 5% of the ExxonMobil stock. Company operations ARE NOT even determined by shareholder votes: the board of directors make those decisions. Thus the use of the word “directors”. LOL.

    And who elects the BOC? The shareholders vote. And since the Saudi govt will own 95% of the stock who do you think will win those elections?

    “It also means obviously sharing the profits.” Profits of a public company are “shared” by the distribution of dividends. The amount of those dividends are set by the Board of Directors. If the BOC decides no dividends then no shareholder gets sh*t…including the Saudi govt. It would just have to settle for the 50% of Aramco’s revenue it collects as taxes. Of course anytime the govt decides to revert to taking 85% of Aramco’s income as taxes (as it does today) it has the full sovereign authority to do so.

    I’m not just picking on our buddy Looker. Many here apparently have no idea how public corporations are controlled. Even here in the USA where the SEC is charged with protecting shareholder rights. And the SEC will tell you that the only right a 5% owner of the stock in a US public company has is to sell their position if they don’t like how the company is being run.

  10. onlooker on Sat, 21st Oct 2017 4:56 pm 

    Sorry Rock. I did not know that only 5 percent was on the selling block. I thought all the shares. If I am not mistaken over 50 percent control of total shares/stocks would grant effective control via the Board of Directors to any person/entity that controlled said percent. Thanks for explaining the real situation.

  11. makati1 on Sat, 21st Oct 2017 6:40 pm 

    MM, I never said that Asia would not ‘collapse’. I said that the West, and especially the US, will go down the hardest with the most pain. What don’t you understand about falling off of the top rung of a ladder vs the bottom rung? The higher (wealth/conveniences/consumption) you are, the harder the fall. The US has far more to lose than some rice farmer with nothing.

  12. Davy on Sat, 21st Oct 2017 7:14 pm 

    Rice farmer with nothing. Lol mad katter, you should look at how many millionaires there are in Asia. More than any other continent. I guys in your crazy mind these millionaires will not feel any pain. What a loonie toonie.

  13. makati1 on Sat, 21st Oct 2017 7:33 pm 

    The millionaires/billionaires can die and should. I have no problem with that. I encourage it.

    As for the rest, most will hardly notice the change. How do you miss electric if you never had it? How do you miss running water in your home if you never had it? How do you miss grocery deliveries when you grow your own food? Banks if you never used or had need for one? There are billions who will never notice the collapse of globalization or the financial system that supports it. For many it will mean an improvement in life as their oppressors will be gone. America especially. Your view of the real world is too narrow, Davy.

  14. Davy on Sat, 21st Oct 2017 7:40 pm 

    Ha ha, sure mad katter, famine is nothing to joke about.

  15. makati1 on Sat, 21st Oct 2017 7:50 pm 

    Famine? Where? Bangladesh? India? Maybe. Maybe it is just poor government management of their resources. Do YOU know what is really happening there or just the Western propaganda you read and watch on TV? India will break into a thousand small units when the SHTF. Bangladeshis will migrate to India or China or Burma. Things will change, but most will survive.

    Take away food stamps in the US and see people starve or riot for food. Even today, America’s food source is in danger of collapsing as the climate changes. Ask Florida, California, or the Dakotas what change can do. Remember the Dust Bowl. It will happen again only worse. The US imports over 20% of its food. What happens when that stops? We shall soon see.

  16. makati1 on Sat, 21st Oct 2017 7:53 pm 

    Davy, you didn’t defend you rich buddies! They should be the first to go along with admirals, generals and politicians. No problem. Vermin should be exterminated with no regrets.

  17. Davy on Sat, 21st Oct 2017 7:54 pm 

    Sure mad katter, your good old food stamp line. Food stamps are a small stipend compared to your social security. You would starve if your social security would stop. What a joke. Lol

  18. Davy on Sat, 21st Oct 2017 7:57 pm 

    Mad katter, the US imports foods that are not vital. You know that. Lol. Asia would be in hardship without US exports.

  19. makati1 on Sat, 21st Oct 2017 8:08 pm 

    Really? I think they would manage quite well. They would have to quit their grain feed beef diet, but only the more wealthy can afford that anyway. And you ASSUME that all countries would stop exporting. Not so. Why do you think the new Silk Road is being built? Trade. Overland trade. Sorry America, you are too far across oceans to be included.

    Do you know what foods the US imports?
    Live meat animals
    Meats
    Fish and shellfish
    Dairy
    Vegetables
    Fruits
    Nuts
    Coffee and tea
    Cereals and bakery
    Vegetable oils
    Sugar and candy
    Cocoa and chocolate
    Other edible products
    Beverages 2/
    Liquors

    $120,000,000,000.00+ worth.

    https://www.ers.usda.gov/data-products/us-food-imports.aspx

    And you are going to replace them with???

  20. MASTERMIND on Sat, 21st Oct 2017 9:09 pm 

    Madkat1 why do you keep ignoring the peer reviewed studies? They conclude global collapse. Not just the US. The US will be the very last country to collapse. And when the US domino falls, down goes the rest of the free world. Your dictator ruler will turn you into his slave. Especially if there is no US around to stop mass genocide and slavery. Only one rule he will tell you “NO COMPLAINING”

  21. onlooker on Sat, 21st Oct 2017 9:41 pm 

    https://www.alternet.org/environment/we-could-be-witnessing-death-fossil-fuel-industry-will-it-take-rest-economy-down-it
    ENVIRONMENT

    We Could Be Witnessing the Death of the Fossil Fuel Industry—Will It Take the Rest of the Economy Down With It

    According to peer reviewed study

  22. Boat on Sat, 21st Oct 2017 10:27 pm 

    Congrats Houston, we are going to the World Series.

  23. makati1 on Sat, 21st Oct 2017 10:40 pm 

    MM, why do you believe it? The “peer reviewed” articles published for decades saying that tobacco and smoking was not harmful were bought and paid for by the tobacco in dusty. Bought doctors were often used ot sell death. I distrust anything that is not obvious and logical. You ALWAYS have to look at who signs the paycheck. ALWAYS.

  24. makati1 on Sat, 21st Oct 2017 10:43 pm 

    Sorry, MM, the US is the main slaver, mass murderer and pirate in the world. All others come way back in the line. In case you didn’t know, many countries are controlling both without US intervention. But ignorance is a rampant disease in America.

  25. makati1 on Sat, 21st Oct 2017 11:01 pm 

    onlooker, I was interested in the referenced article until it hit the ‘renewable’ fantasy. Then it wanders into the “what if” and “if only” fairyland. We pushed over the first extinction domino long ago. We are NOT going to change until forced by collapse. It is already too late to save humanity by anything man can do. We will not try. We will be like an atheist on his death bed calling on God to save him from the consequence of his self-destructive lifestyle. Too late.

  26. fmr-paultard on Sat, 21st Oct 2017 11:09 pm 

    it’s not profitable to make chips anymore except maybe intel and amd. where will eurotards find chips to run their renewable infrastructure?

  27. Boat on Sat, 21st Oct 2017 11:17 pm 

    mak,

    Since the end of WWII death from conflicts are measured in tens or hundreds of thousands instead of millions. Far more die from dirty air, water etc. You don’t have the ability to put numbers in historical context.

  28. makati1 on Sun, 22nd Oct 2017 12:18 am 

    Boat, you have no ability … period.

    What does natural deaths have to do with the slaughter you admit the US did and does? The US is a mass murderer of innocent men, women and children. It is doing it even today as you type. It is a terrorist country bar none. The rabid dog needs put down.

  29. GregT on Sun, 22nd Oct 2017 12:35 am 

    “Since the end of WWII death from conflicts are measured in tens or hundreds of thousands instead of millions.”

    More nonsense Boat.

    https://en.wikipedia.org/wiki/List_of_wars_by_death_toll

  30. fmr-paultard on Sun, 22nd Oct 2017 12:43 am 

    Make no mistake SENTPs gonna die. The level of propaganda has become nonexistent

    Only a matter of time they’re physically eliminated

  31. fmr-paultard on Sun, 22nd Oct 2017 12:48 am 

    Boat is supertard

  32. rockman on Sun, 22nd Oct 2017 1:00 am 

    Looker – Unless the target has changed it has always been a 5% placement. Also not my area of expertise but stock can also be issued with no voting rights. But let’s say Aramco sells 90% of the stock with full voting rights. And Aramco with 10% wants to go one way and the 90% wants to go a different way. Anytime Aramco gets voted down the Saudi govt is free to raise the tax on Aramco to 99%. Then how would the 90% vote?

    Understand that today the Saudi tax rate on Aramco is 85%. That’s one reason forks are estimating Aramco’s value at such rediculously high levels: they are not taking into account NET income after taxes. Aramco has promised to reduce the tax rate to 50% when it does the IPO. But the Saudi govt is under no legal restriction preventing it from increasing it at a later date. Just as the US govt is free to raise corporate taxes anytime it wants to.

    One more problem: what will be Aramco’s net revenue after expenses? The Saudi govt has never released the details but I’m pretty sure the 15% Aramco is allowed to keep after taxes is used to fund all operations including major capex projects. IOW after current taxes Aramco might receive $80 billion. But if overhead, operations and capital project expenses might eat up $75 billion. Thus only $5 billion is left to make dividend payments…if the BOC decides to pay any at all.

    None of these possibilities are purely theoretical…such twists have been employed 100’s of times by US pubcos and all legal by SEC regs.

    Here’s a list of 80 companies in the S&P 500 that PAY NO DIVIDENDS:

    http://www.dividend.com/investor-resources/sp-500-companies-that-dont-pay-dividends/

    One of them is Chesapeake. The total “value” of its stock today (the market cap) is $3.8 billion. In 2014 it was $31 billion. But what does the market cap really represent? It’s obvious not an indicator of dividend potential since Chesapeake isn’t paying any. And certainly not a measure of what the company is worth since its generating ZERO income to the shareholders. And not a measure of the gain you would make by selling in the future: if you had bought $100,000 of Chesapeake stock 3 years ago you could sell it for $11,000 today.

    The simple answer: a company’s stock is worth what someone will pay to buy it: not a penny more or a penny less. Which is why all the efforts to “calculate” what the Aramco stock will be worth at any point in time is silly. There is no way to calculate what someone will pay for a stock in the future. You can guess, of course. Just like the folks who bought Chesapeake stock in 2014 guessed it was going to be worth more in the future. Of course that stock has never been worth more then what was paid for it 3 years ago.

    And you would have not received any dividends either.

  33. makati1 on Sun, 22nd Oct 2017 1:20 am 

    Rockman, as you say, everything is only worth what someone will pay for it when you want to sell. Those who tried to sell stock on October 29th, 1929 found out what it was worth. Almost nothing. Worthless paper. Homes are also only worth what someone will pay when you want to sell as millions are going to find out soon. Even dollars are only worth something, if someone is willing to accept them in trade for real things of value, like food. That day may also be drawing to a close. Interesting times we live in.

  34. Davy on Sun, 22nd Oct 2017 4:42 am 

    “ MM, why do you believe it? The “peer reviewed” articles”

    Says the mad katter, who routinely poste references to Global Research. LOL

  35. deadlykillerbeaz on Sun, 22nd Oct 2017 7:38 am 

    Saudi Aramco doesn’t have to make a penny, even if it is losing money, they’ll still win.

    How many shares issued? How many outstanding?

    10 billion? Five percent float, 500,000,000 available for trading, makes for shooting fish in a barrel.

    If 9,500,000,000 are held by insiders, the deck is stacked. How much is paid per share by insiders?

    Any of those 500,000,000 shares in the float can reach a price of 4,000 USD per share, makes the market capitalization 2,000,000,000,000 dollars, not the price per share paid on the 9.5 billion shares already owned. If I paid 100 dollars per share for 10,000, a one million dollar investment, I can sell 1,000 shares, ten lots, for 2,000 dollars. I can make a million dollars and still have 9000 shares remaining. Besides, I can buy an option, a call, and buy back the the 1,000 shares for 500 dollars, pocket 500,000 dollars. Free jet fuel for the private jet.

    In other words, the five percent public offering is a scam and a trap! Maybe a harsh assessment, the truth hurts.

    The unexamined stock is not worth owning.

    Back in 1990 or so, Berkshire Hathaway was priced at 7100 USD per share. Friday’s close was 283,352.50 USD per share.

    It can and does happen.

    In September of 1929 the Dow was 381.

    Ended up at 40 circa 1932.

    A black swan event, nobody had any money to cover, all foam and froth.

    It can and will happen again.

    Just my humble uninformed low information idiot opinion.

    Drinking time!

  36. rockman on Sun, 22nd Oct 2017 2:56 pm 

    Baez – “If 9,500,000,000 are held by insiders, the deck is stacked. How much is paid per share by insiders?” Details still lacking but as I understand it the 95% of the stock won’t be bought by “insiders”. In fact, it won’t be bought by anyone: it will be held by Aramco as “treasury stock”.

    Treasury stock (treasury shares) are the portion of shares that a company keeps in its own treasury. Treasury stock may have come from a repurchase or buyback from shareholders, or it may have never been issued to the public in the first place. Which also means Aramco could sell some of the treasury stock to raise money in the future.

    IOW the board of directors will be elected solely by Aramco management. The board may have some “outside directors” but I wouldn’t be surprised if the majority are members of the royal family.

    As you said the deck will be stacked. And done so in compliance with all international law. Which is why I suspect the future transaction will look more like a bond offering to, let’s say, at least in part to China (which we may never see the details). Essentially it will amount to nothing more then the KSA borrowing some future revenue at the cost of the bond interest. Which could be a very good financial move for the Saudis if the price of oil eventually increases to a level that more then offsets the cost of the bonds. Essentially the same rationale used when any corporation borrows money: future increases in revenue will pay the bond principle + interest + maybe some profit.

    Sometimes the plan works…sometimes it don’t. LOL.

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