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Saudi Aramco IPO

Discussions about the economic and financial ramifications of PEAK OIL

Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Move

Unread postby AdamB » Fri 13 Oct 2017, 22:52:33


We noted a month ago that the long-awaited Saudi Aramco IPO, scheduled for mid-2018, could be delayed to 2019, but now, according to The FT, Aramco is considering shelving plans for an IPO altogether in favor of a private share sale to the world’s biggest sovereign wealth funds. The FT notes that talks about a private sale to foreign governments - including China - and other investors have gathered pace in recent weeks, according to five people familiar with the IPO preparations, amid growing concerns about the feasibility of an international listing. The Saudi state oil company has struggled to select a suitable international venue for its shares, as New York and London have vied for what has been billed as the largest ever flotation. The company would still aim to list shares on the kingdom’s Tadawul exchange next year if they pursue ..


Saudi Arabia Shelves IPO
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby Tanada » Sat 14 Oct 2017, 08:58:20

As has been pointed out elsewhere, I will believe it when I see it. Having invested this much time and PR in the IPO I think it is unlikely the offer is actually dead.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby onlooker » Sat 14 Oct 2017, 10:43:09

I think shelving the IPO, would be shameful so the opposite of face saving
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby rockdoc123 » Sat 14 Oct 2017, 10:52:50

response from the Saudis yesterday as reported by CNBC

Saudi Aramco said it remains on track to offer shares to the public, after a newspaper report said the company was considering shelving its IPO.

"A range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track," a spokesman said. The comment echoes public statements made in the past week by both Khalid Al-Falih, Saudi energy minister, and Saudi Aramco President Amin Nasser.

But the report in the Financial Times echoed speculation that has been circulating as Saudi Aramco officials debate how and when to issue shares. The report is also the latest in a series to cast doubt on the massive IPO which would be five percent of what would be the world's largest listed oil company.

One source close to the IPO told CNBC that one thing under review is whether to list on the Saudi market first and then list on an international exchange at a later date. The source said the debate is understood to be between a London or New York listing, given the need for substantial capital market to raise such large sums.

The newspaper report quoted five unidentified sources saying that talks about a sale to a foreign government, including China, and other investors have picked up in recent weeks, amid concerns about the feasibility of a foreign listing.

An energy market source said talks with Asian sovereign wealth funds and western institutions have been ongoing since the idea of the IPO was first floated.

"The definition of an IPO could also mean private placement with Asian sovereign wealth funds," the source said. "They've been in discussions with them about the IPO from the beginning."

The source added that the difficulties of a listing , including the transparency requirements are certainly a consideration for Aramco, which is government owned and intertwined with the bureaucracy of the kingdom.

"Saudi Aramco thinks by years, if not decades and financial markets think quarter by quarter," said the source.

Helima Croft, head of global commodities research at RBC, notes that all previous stories about issues or delays with the 2018 IPO have been quickly denied.

"I think it is always worth remembering that a key goal of the Aramco sale was to yield ‎$100 billion for the Public Investment Fund. Private placement may simply be the easier way to get to that goal in 2018," said Croft.

The speculation also swirled just ahead of a conference in Riyadh later this month for global investors on the future investment initiatives by the Public Investment Fund.

There's a lot at stake for bankers on the deal.

Rich Peterson of S&P Global Market Intelligence estimates with a 1 percent figure for underwriters, the shelving of the IPO would result in a $500 million loss for each $50 billion IPO sale.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby coffeeguyzz » Sat 14 Oct 2017, 11:05:53

The political intrigue within the house of Saud may be one of the most momentous, under reported stories of the day.
The antipathy towards MBS is both intense and at levels of life or death for hundreds (thousands?) throughout the vast 'royal' lineage.

Throw in the repressed Shia population in the eastern oilfield areas, the emerging social/political (aka feminist) movements, external players including Israel, Iran, the US and more ...
Chances of dramatic events occurring in the very near future as the Old Man becomes worm food are exceedingly high.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby onlooker » Sat 14 Oct 2017, 11:32:31

Good observation Coffee. Yes, they are fighting literally for their lives. And they are truly unpopular in KSA. Add to it some personal dysfunctions and power hunger and greed and we are watching infighting worthy of any of the Pharaoah or Cesaer dynasties. This also could be affecting the IPO, as lack of consensus within the royal ranks and so conflicting reports about this IPO and other events. Hard for anybody to know as they tend to be so secret. Here is link to dysfunctions. https://www.reuters.com/article/us-saud ... SKBN1A41IS
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby evilgenius » Sat 14 Oct 2017, 12:06:36

The obvious question is whether it is the transparency that the New York and London exchanges would require is the problem? Maybe that transparency hinders the functioning of power? Maybe it reveals how much oil is really there? I'm inclined to think the reserve situation is not their immediate worry.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby Outcast_Searcher » Sat 14 Oct 2017, 12:41:20

evilgenius wrote:The obvious question is whether it is the transparency that the New York and London exchanges would require is the problem? Maybe that transparency hinders the functioning of power? Maybe it reveals how much oil is really there? I'm inclined to think the reserve situation is not their immediate worry.

I wondered about the transparency issue too when I first saw this.

OTOH, it's just a rumor at this stage.

I never invest in IPO's, but they're often an interesting show to watch.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby GASMON » Sat 14 Oct 2017, 12:42:54

evilgenius wrote:The obvious question is whether it is the transparency that the New York and London exchanges would require is the problem? Maybe that transparency hinders the functioning of power? Maybe it reveals how much oil is really there? I'm inclined to think the reserve situation is not their immediate worry.


Perhaps their oil is running out quicker than expected. Quick sale to offload the lot, all the Royals and their $$$Trillions encamp to a safe haven (London, Switzerland USA perhaps) and the whole country goes to hell. As usual "world" leaders who care not one jot about the average Joe (or Mohammed).

The whole lot stinks.

And what was the old git doing in Russia last week buying missiles from Vlad, - I thought the USA / UK supplied arms to the Saudi's.

Ah well - it is the will of Allah.

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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby rockdoc123 » Sat 14 Oct 2017, 13:17:05

The obvious question is whether it is the transparency that the New York and London exchanges would require is the problem? Maybe that transparency hinders the functioning of power? Maybe it reveals how much oil is really there? I'm inclined to think the reserve situation is not their immediate worry.


as explained in several articles this year the transparency issue they are referring to is given that Aramco is a sovereign owned corporation there are certain things (outside of reserves and finances) that under normal circumstances (if they were a non sovereign public company) would have to be reported that could create security issues for Saudi Arabia (or any other soverign owned company trying to execute an IPO). This is why in the UK they are planning to change some of the rules as they apply to sovereign-owned entities (not reserves requirements). A number of years ago EcoPetrol in Colombia ran up against this hurdle when they looked at listing on the NYSE. They instead listed on the Colombian exchange and then had ADR (American depository shares) trade on the TSX and NYSE. They subsequently delisted from TSX due to the low volume of trading but remain on the NYSE. They release their reserve, production, and financial information annually but still resist a NYSE listing due to certain disclosures necessary that any sovereign government would feel uneasy about. Remember that Aramco already had two of the largest reserve auditing firms in the world review and create independent reserve reports that are a requirement of listing on the LSE, AIM, NYSE or TSX. They wouldn't have gone to that trouble (and risk) if they weren't fully committed to the type of reserve and financial disclosure they would be committing to with an IPO on one of the international markets.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby Cliffhanger1983 » Sat 14 Oct 2017, 13:34:18

Saudi Arabian oil reserves are overstated by 40% - Wikileaks

https://www.theguardian.com/business/20 ... -wikileaks
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby onlooker » Sat 14 Oct 2017, 13:43:07

Cliffhanger1983 wrote:Saudi Arabian oil reserves are overstated by 40% - Wikileaks

https://www.theguardian.com/business/20 ... -wikileaks

Careful Cliff, you might destroy the soothing mythology of the cornies who think what we are told by the Authorities and official channels is the truth, the whole truth and nothing but the truth. :razz:
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby Cliffhanger1983 » Sat 14 Oct 2017, 14:05:29

Saudi Arabia may be out of oil to export by 2030 – Citibank

http://www.aljazeera.com/blogs/middleea ... 35876.html
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby rockdoc123 » Sat 14 Oct 2017, 14:46:16

Saudi Arabian oil reserves are overstated by 40% - Wikileaks


What a load of crap. The article is from 2011 (note for those who are time challenged, that is six years ago) and the person who is leaking the information stated SA would never be able to reach the 12.5 MMB/d spare capacity they had as a goal. Low and behold they met that capacity a year later. He is also talking about 50% recovery which has now been replaced by Aramco with an eventual 70%. And Sadad al-Husseini was ousted from Aramco back in 2004, well before they embarked on the mega-projects that got them to the 12.5 MMB/d spare capacity. He was hardly in a position to know very much about anything that happened during the period of growth.

Saudi Arabia may be out of oil to export by 2030 – Citibank
and that article is from 2012. It is based on projections of internal growth demand for energy but of course because it is so out of date it would not be aware of the initiatives SA is undergoing to increase it's natural gas production and conversion to power. In essence, their numbers are 5 years out of date.

perhaps next time when you want to instill fear amongst the hordes you might want to check the date on your sources. :roll:
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby GASMON » Sat 14 Oct 2017, 14:53:28

So, Rock, how much oil have they ? - Educated guess.

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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby onlooker » Sat 14 Oct 2017, 14:58:51

So Rockdoc, you can vouch for those numbers you're giving? Despite KSA giving indications of financial problems and moving away from oil. Despite the fact that as far back as 2005, Mathew Simmons noted serious problems in KSA with his book 'Twilight in the Desert ' and how for many years they seemed to always "magically" have the same almost identical amount of Reserves. I guess we all want to believe what we want to believe
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby rockdoc123 » Sat 14 Oct 2017, 15:38:05

Despite KSA giving indications of financial problems and moving away from oil.


your definition of "financial problems" must be different than most people. Take a look at their budget for 2017 versus actuals, look at their 5-year projection. They will have a balanced budget by 2020 based on current oil prices without the IPO. Their budget deficit is way down from last year so looks like they are on the right path and have much less to worry about than you think.

Mathew Simmons noted serious problems in KSA with his book 'Twilight in the Desert ' and how for many years they seemed to always "magically" have the same almost identical amount of Reserves


years ago I pointed out what a shoddy job Simmons did, basically, a financial advisor reading engineering literature, but not only that it was apparent he only read the abstracts and actually didn't understand what he was reading. Many of the papers he claimed were showing a problem actually were talking about the solution they had already arrived at and proven. As to the reserve numbers I've explained the rationale for that a number of times. IT happened right when OPEC came into force and the decision was likely made to recognize reserves in a standard fashion. The fact they haven't changed has to do with reserve replacement. Like Shorty, you need to understand the definitions. Saudi Arabia reports proven reserves and as they produce they replace proven producing with probable non producing. There was a lot of that that went on in 2005 - 2010 during the mega projects. The view (not just mine but a number of oil and gas critics) is that SA simply moves enough reserves over each year so as to keep their proven reserves at a reasonable number. And that interpretation is bolstered by the two reserve audits which were conducted this past year for the purposes of the IPO. As I have said these are very large firms that audited the reserves and they have a huge amount of credibility in the industry. They are bound by law with regards to what they sign off on and it isn't worth their while to somehow collude to inflate reserves given they get virtually nothing by doing so and put their multi-million dollar a year businesses at risk. Those reports will be public when the IPO is completed but in the meanwhile, the firms have said that their analysis is largely in agreement with the reserves the Saudis have stated.

Not sure why you and the rest of the chicken little crowd are so adverse to believing what is stated by Saudi Arabia. I've been there and have met with the Aramco execs and one of the crown princes in London years ago when they had the first natural gas bid round. They are highly professional and educated. Their technology and implementation of same is far ahead of pretty much anyone else in the oil and gas business.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby pstarr » Sat 14 Oct 2017, 15:58:55

"Not sure why you and the rest of the chicken little crowd are so adverse to believing what is stated by Saudi Arabia. "

They sent over 12 of their crappiest with box cutters to kill 2,000 of our best. Saudi Arabia has no reason to reveal the truth and every reason to lie. It's a nation of slaves ruled over by a single family of hateful feudal liars.
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby Cliffhanger1983 » Sat 14 Oct 2017, 16:09:18

Rockman is as dumb as they come and never sites any sources. he is nothing more than a paid troll and based on his 'no worries' arguments i can safely say they are paying for shit these days. sad...
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Re: Saudi Aramco Reportedly Shelves IPO In “Face-Saving” Mov

Unread postby onlooker » Sat 14 Oct 2017, 16:11:33

Cliffhanger1983 wrote:Rockman is as dumb as they come and never sites any sources. he is nothing more than a paid troll and based on his 'no worries' arguments i can safely say they are paying for shit these days. sad...

Do you mean Rockdoc. or Rockman? They are two different people.
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