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Saudi Aramco IPO

Discussions about the economic and financial ramifications of PEAK OIL

Re: KSA has peaked, cancels Aramco IPO

Unread postby rockdoc123 » Fri 06 Jul 2018, 10:24:39

And yet Kublikhan has found several news stories indicating that KSA actually IS independently increasing oil production, and plans to independently increase production even more in July....perhaps reaching a new all time peak in oil time oil production.


you should probably read the articles. What is said is SA raising production is all part and parcel of the OPEC agreement made last month where SA agreed to increase production in order to offset problems elsewhere. From the first press piece referenced:

OPEC agreed with Russia and other oil-producing allies on Saturday to raise output from July by about 1 million bpd, with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers.


It will be very interesting to see how long KSA can sustain production at these new higher levels. You'd think that boosting production of oil to a new peak would be excellent PR for the long planned IPO of ARAMCO and its oil....but the WSJ just reported that ARAMCO insiders actually want the IPO called off.


PR has virtually little value in terms of this IPO. Valuations are decided internally and with banks and regulators inside the exchanges and largely based on NPV of the corporation as outlined in the independent reserve analyses and the financial reports. There will almost certainly be little float available to the public, almost all of it being spoken for by large investment houses. The level of production does not come into play in this IPO given it is reserves based valuation. The share price once listed will be impacted by both commodity price and production (cash flow per share is the main means of valuation at that point).
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Re: KSA has peaked, cancels Aramco IPO

Unread postby evilgenius » Fri 06 Jul 2018, 10:31:59

When you consider that Facebook got sued after its IPO, then you realize that Saudi Arabia can too. It doesn't matter if the facts are right. You can show that the reserves are there, but that could be an end in itself. Such a suit isn't going to be summarily dismissed. Things would come to light. Fear of an uprising may be what is behind this. In the current Middle East, with a dictatorship, I don't know if they can afford that. If Saudi Arabia goes all Syria, how much oil would they produce?
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Re: KSA has peaked, cancels Aramco IPO

Unread postby rockdoc123 » Fri 06 Jul 2018, 11:10:26

When you consider that Facebook got sued after its IPO, then you realize that Saudi Arabia can too. It doesn't matter if the facts are right. You can show that the reserves are there, but that could be an end in itself. Such a suit isn't going to be summarily dismissed. Things would come to light. Fear of an uprising may be what is behind this. In the current Middle East, with a dictatorship, I don't know if they can afford that. If Saudi Arabia goes all Syria, how much oil would they produce?


what kind of nonsense is this now?
The only law suits that have ever been mentioned in context of Saudi Arabia are the class action suits which could be raised by surviving families of 911 under the view that SA supported at least some of the terrorists responsible. That would have to be filed in a jurisdiction where Aramco is registered in some manner that has laws friendly to that sort of litigation. There are few places in the world where that is the case. IF Aramco were to list on NYSE and have a business registered in NY state then they would be a potential target if strong enough ties could be drawn between the company and the SA gov't.
Suggesting someone would be sued for reported reserves is basically ridiculous, especially when the reserves have been independently audited under the regulations consistent with the major exchanges.
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Re: KSA has peaked, cancels Aramco IPO

Unread postby Plantagenet » Fri 06 Jul 2018, 12:21:35

tita wrote:Even if KSA can't reach 11 Mb/d this summer, that won't mean they are at their peak.


If they don't exceed the April 2015 peak, it will be very interesting. The NYTimes in a recent article (linked above) said they'd have a very hard time doing it.....but who puts any credence in the NY Times.

Even if they do exceed the April 2015 peak, I bet it won't be by much. IMHO KSA oil production will still have peaked, but rather then reaching a sharp tidy peak and then quickly falling the KSA peak is taking the form of an "undulating plateau" starting in 2015 and lasting for several years.

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Re: KSA has peaked, cancels Aramco IPO

Unread postby Plantagenet » Fri 06 Jul 2018, 12:33:38

rockdoc123 wrote:The only law suits that have ever been mentioned in context of Saudi Arabia are the class action suits which could be raised by surviving families of 911 under the view that SA supported at least some of the terrorists responsible. That would have to be filed in a jurisdiction where Aramco is registered in some manner that has laws friendly to that sort of litigation. There are few places in the world where that is the case. IF Aramco were to list on NYSE and have a business registered in NY state then they would be a potential target if strong enough ties could be drawn between the company and the SA gov't.


1. I don't think even the most far out conspiracy nut ever thought ARAMCO was behind 911 or had anything to do with 911. Aramco is a National Oil Company---not a terrorist organization. :lol: :-D 8) :razz:

2. There already is a 911 lawsuit against Saudi Arabia preceeding through the courts. If the lawsuit is successful and Saudi Arabia is required to pay damages to 911 victims and their families, it isn't going to matter if ARAMCO is listed or not---the judge will require Saudi Arabia to pay damages. If KSA has to sell off parts of ARAMCO to pay the damages, it won't matter a bit if ARAMCO does the IPO or not---KSA will still have to pay.

911-lawsuits-judge-saudi-arabia

Nope---the concern at ARAMCO about potential lawsuits if they do the IPO isn't about 911---its about lawsuits related to the IPO. SO they probably won't do the IPO.

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Re: KSA has peaked, cancels Aramco IPO

Unread postby rockdoc123 » Fri 06 Jul 2018, 12:47:13

Just a reminder that Saudi's production peak is not determined by the ability to produce at a certain rate unless there is a serious call on their production (Trump asking for more is hardly serious). According to all analyses out there I've read, the current supply even without Libya and reduced purchases from Iran can meet demand. The sudden rise in prices is typical of the speculation that has been going on in oil buying and selling for a long time. It is not so much about what the S/D situation is now but what traders are thinking it might be in the future.
According to SA and the various foreign contractors involved in the mega projects their current spare capacity is 12.5 MMB/d. They use the EIA definition of spare capacity which is the production can be brought on stream in 30 days at minimal additional cost (ie no new wells and no new facilities construction needed). I said many years ago on this site that the only way to test whether that spare capacity is actually there is for a universal call (OPEC and non-OPEC countries) on SA to produce more. There hasn't been one since 2005.

1. I don't think even the most far out conspiracy nut ever thought ARAMCO was behind 911 or had anything to do with 911. Aramco is a National Oil Company---not a terrorist organization. :lol: :-D 8) :razz:


Give us all a break, Aramco was and still is a State owned company. And the Board members of that company are also Saudi rulers meaning the argument of "at arms length" is difficult plus the suit argument could be it was funds generated from ARAMCO that were used to fund the terrorists.

And as to far out conspiracty theory....well the Wall Street Journal reported this was exactly why ARAMCO was worried about an IPO in NY.
Saudi Arabia's ruling family could avoid listing its state oil company, Saudi Aramco, in New York, due to fears over lawsuits related to the 9/11 terrorist attacks.

According to a report from the Wall Street Journal, which cites people familiar with the matter, senior figures in the IPO process worry that a New York listing "could expose the kingdom to lawsuits from shareholders and 9/11 victims." Among those figures is Saudi oil minister and Aramco's chairman, Khalid al-Falih.


Nope---the concern at ARAMCO about potential lawsuits if they do the IPO isn't about 911---its about lawsuits related to the IPO. SO they probably won't do the IPO.


and what exactly would those lawsuits entail pray tell? :roll: I've never heard anything so ridiculous.
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Re: KSA has peaked, cancels Aramco IPO

Unread postby pstarr » Fri 06 Jul 2018, 15:32:57

We can't win, its impossible to get the truth out, not when an oil company flack/talking head is paid sooooo much to gin up consumer confidence by denying peak oil
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Re: KSA has peaked, cancels Aramco IPO

Unread postby asg70 » Fri 06 Jul 2018, 15:37:11

pstarr wrote:We can't win, its impossible to get the truth out, not when an oil company flack/talking head is paid sooooo much to gin up consumer confidence by denying peak oil


Yeah, if only everyone shut up and let you take over the forum then humanity would be saved!

#DelusionsOfGrandeur
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Re: KSA has peaked, cancels Aramco IPO

Unread postby Plantagenet » Fri 06 Jul 2018, 15:57:32

rockdoc123 wrote:could be it was funds generated from ARAMCO that were used to fund the terrorists....And as to far out conspiracty theory....well the Wall Street Journal reported this was exactly why ARAMCO was worried about an IPO in NY.


You're repeating your wild claims about ARAMCO funding the 911 terrrorists, but there is absolutely no evidence to support your claim.

Do you have any evidence of this, or are you just making this up?

And the proposed IPO has absolutely no bearing on the ability of 911 survivors to sue KSA or ARAMCO or anybody else they want to sue. In fact there is ALREADY a lawsuit against KSA in the courts----but it doesn't mention ARAMCO. I linked to it above.

The IPO is totally irrelevant to this. Congress passed a law in 2016 called the Justice Against Sponsors of Terrorism Act that allows US citizens to sue anyone who sponsors terrorism. Congress even overrode a veto from then-President Barack Obama's veto to enact the Justice Against Sponsors of Terrorism Act. This act does not require foreign corporations or individuals to do an IPO in the United States before they can be sued.

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Re: KSA has peaked, cancels Aramco IPO

Unread postby rockdoc123 » Fri 06 Jul 2018, 16:26:17

You're repeating your wild claims about ARAMCO funding the 911 terrrorists, but there is absolutely no evidence to support your claim.


I didn't say they did , did I. What I said is this is something that Aramco is worried about in terms of listing on the NYSE. It has been reported numerous times with comments from the Saudis. Whether the Saudis did or did not fund or support the 911 terrorists, I have no clue, they say they didn't but that will not keep them from being sued by class action legal bandits.

A lawsuit of this nature is not something that would be a precedent. Talisman Energy a Canadian Oil and Gas company who was active around the world faced several years of court battles regarding the Sudan. The claim was that money from the consortium that Talisman was a partner in funded the Sudanese government who then used that money to bomb civilians in the south. Talisman had nothing to do with the government decisions nor their war but the charge that was made was they were complacent and aided the Sudanese gov't whether intentionally or not. It was eventually thrown out of court but not after the company had spent millions of dollars defending itself.
The premise would be the same for someone filing a class action lawsuit against ARAMCO. Money from oil production by ARAMCO goes directly to the gov't who then uses it to fund terrorism. Not hard to see how someone could try to make that claim.

Numerous articles have suggested 911 litigation is an issue for SA listing in NY and lawyers have warned them against it.

https://oilprice.com/Energy/Energy-General/Saudi-Aramco-IPO-Under-Pressure-As-911-Lawsuits-And-Oil-Prices-Hit.html

Saudi Aramco IPO Under Pressure, As 9/11 Lawsuits And Oil Prices Hit

The JASTA lawsuits have come at the same time that Saudi minister of foreign affairs Al Jubeir stated in the press that Saudi Arabia is having "serious discussions" with the New York Stock Exchange about having the NYSE as one of the exchanges for state oil giant Saudi Aramco's IPO. He reiterated on Friday, March 24, that “our objective is to try to complete the IPO sometime in 2018. There are serious discussions with the New York Stock Exchange about having the NYSE be one of the exchanges for the Aramco IPO and I believe the decision will be made on the financial merits". Looking however at the lawsuits, this could become doubtful soon. For U.S. investors and Washington pundits, the threat is also real as Aramco and MBS could decide not to list it on NYSE but choose major listings in London (LSE), Hong Kong or Tokyo. Such a decision could be another major slap in the face to Trump, as part of his ongoing economic strategy would be increased investments in the U.S. infrastructure sector. Saudi Arabia, via MBS, has been promising vast investments in these sectors, in addition to Saudi high-tech investments already done or projected. The lawsuits against the Kingdom currently pursued will not be taken lightly by Saudi royalty


https://www.ft.com/content/d25bc250-491e-11e7-919a-1e14ce4af89b

Legal counsel, which usually takes precedence over advice from financiers, implies London is now the frontrunner. “The company is very conservative,” said one person briefed on the matter. Saudi Aramco’s assets in the US, including the country’s biggest refinery Motiva, were more vulnerable to legal action, he said. “It would be reckless to list in New York when advised so strongly against it,” he said.
The legal risks arising from a New York listing include new US terrorism legislation that could allow families of the victims of the 9/11 terror attacks to sue Saudi Arabia.


https://www.wsj.com/articles/aramco-ipo-stalled-by-indecision-over-where-to-list-1517158800

Saudi Arabia’s state-owned oil producer into the world’s largest public company, the kingdom and its advisers remain stuck on the crucial question of where to list the shares.
External advisers and officials at the company, known as Aramco, have privately warned that Prince Mohammed’s preferred venue, the New York Stock Exchange, could expose the kingdom to lawsuits from shareholders and 9/11 victims, people familiar with the matter said. 


https://www.rigzone.com/news/oil_gas/a/150567/oped_1_trillion_on_the_line_and_saudi_aramco_ipo_riddled_with_risk/

Aramco’s lawyers at White & Case LLP have said as much, and other outside experts are making similar assertions.
“Aramco risks becoming the litigation target of 9/11 victims and every other climate change zealot with a novel legal theory,” said Ethan Bellamy, senior analyst at R.W. Baird & Co. “To reap the rewards of listing in the U.S., inevitably the Saudis must expose themselves to the type of relentless litigation onslaught that plagues most large public companies, in addition to assuming the burdens of September 11.”


https://www.theglobeandmail.com/report-on-business/rob-commentary/expect-saudis-to-keep-aramco-ipo-domestic/article36827656/

A New York listing would expose the Saudi government to the risk of lawsuits related to the Sept. 11, 2001, terrorist attacks (15 of the 19 airliner hijackers were Saudi citizens). 
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Re: KSA has peaked, cancels Aramco IPO

Unread postby Outcast_Searcher » Fri 06 Jul 2018, 16:44:24

pstarr wrote:We can't win, its impossible to get the truth out, not when an oil company flack/talking head is paid sooooo much to gin up consumer confidence by denying peak oil


So the concept of being wrong has no meaning to you apparently. So what would you know about "truth"?

In your mind does truth have anything to do with credible objective facts?

Or it it only your personal beliefs, come what may?
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: KSA has peaked, cancels Aramco IPO

Unread postby ROCKMAN » Sat 07 Jul 2018, 11:29:34

The KSA has reached PO. The KSA hasn't reached PO. The KSA will reach PO soon. The KSA won't reach PO for many years. BLAH, BLAH, BLAH. Does anyone here bother to look at f*cking production curves any more? LOL.

https://www.google.com/search?q=saudi+a ... 0979627533

Granted perceiving an oil production PLATEAU is in the eye of the viewer. But the Rockman has studied THOUSANDS of production curves over the last 43 years. And in his eyes KSA production (excluding periods of reduced production due to low oil prices) has been on a plateau since the mid 70's. As the above curve shows there was a huge ramp prior to the 70's that has not been seen since. And that's despite a period of EXTREMELY HIGH oil prices. Compare that to the HUGE increase in US oil production during the same high oil price period. Why: was ARAMCO not as interested in producing more oil as the US petroleum industry was?

Y'all are arguing over 1 or 2 million BOPD increases...or no increases or a 1 or 2 million BOPD decrease...or no decreases. Get you nose off the KSA oil production "tree" and step back 500 yards and look at the KSA oil production "forest" and your perceptions might change significantly. If not? So what...it won't change the reality of the situation itself.
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Re: KSA has peaked, cancels Aramco IPO

Unread postby rockdoc123 » Sat 07 Jul 2018, 11:52:23

And in his eyes KSA production (excluding periods of reduced production due to low oil prices) has been on a plateau since the mid 70's. As the above curve shows there was a huge ramp prior to the 70's that has not been seen since. And that's despite a period of EXTREMELY HIGH oil prices. Compare that to the HUGE increase in US oil production during the same high oil price period. Why: was ARAMCO not as interested in producing more oil as the US petroleum industry was?


Realize you folks from TX don't get out much....but there is this group called OPEC and this concept called swing producer, and this other concept called market share. Search engine is your friend. :roll:
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Re: KSA has peaked, cancels Aramco IPO

Unread postby Newfie » Sat 07 Jul 2018, 19:26:59

http://gcaptain.com/ghost-ships-no-more ... s-perk-up/


“By Florence Tan and Gavin Maguire SINGAPORE, July 5 (Reuters) – A growing fleet of ships is scanning oceans in search of new oil and gas fields as energy companies, now with more cash thanks to stronger crude prices, gradually resume spending on seismic services after a four-year downturn.

A doubling in the area contracted for seismic work in the first quarter this year from the last three months of 2017 has injected optimism into surveillance firms, with a global fleet of about 24 vessels, most of whom struggled to survive in the past years.“
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Re: KSA has peaked, cancels Aramco IPO

Unread postby evilgenius » Fri 13 Jul 2018, 11:08:47

Hmmmm. So, maybe, in over a year's time off-shore drilling will take off again? The article stated that the oil price needs to stay up at least a year for the trend to hold water. If it does, then an oil company's next step is to drill.
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Re: KSA has peaked, cancels Aramco IPO

Unread postby misterno » Wed 18 Jul 2018, 22:57:07

Disaster for KSA is on the way. The only way out of bankrutcy id oil sold for $115. This is the only way to have balanced budget yet the situation is worsening.
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Re: KSA has peaked, cancels Aramco IPO

Unread postby Plantagenet » Thu 19 Jul 2018, 01:56:58

ARAMCO may be combined with SABIC, a huge Saudi petrochemicals company, in order to increase the value of ARAMCO

saudi-aramco-mulls-stake-in-worlds-no-4-chemical-firm-

You'd think ARAMCO would be pretty darn valuable all by itself, but KSA is apparently looking for some way to goose its value prior to doing the IPO.

If KSA goes ahead with this, KSA will putting an ARAMCO-SABIC IPO on the market instead of the original sale involving just Aramco.

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Re: KSA has peaked, cancels Aramco IPO

Unread postby rockdoc123 » Thu 19 Jul 2018, 22:51:32

If KSA goes ahead with this, KSA will putting an ARAMCO-SABIC IPO on the market instead of the original sale involving just Aramco.


And your point would be??

If they pay lets say $50 MM for a position in SABIC (I have no idea what it would be worth) then it is a wash in terms of the immediate valuation of Aramco for IPO purposes given it would be viewed simply as cash out - cash in unless it could be shown that there is a huge uplift in future NPV.

the rationale for Aramco doing this is likely explained in that article ....it is simply trying to diversify their business away from mainly upstream (much like all the mulitnationals did many years ago)

Aramco plans to boost investments in refining and petrochemicals to secure new markets for its crude, and sees growth in chemicals as central to its downstream strategy to lessen the risk of a slowdown in oil demand.

Aramco is expanding its footprint globally by signing downstream deals and boosting the capacity of its plants.

Aramco’s push into chemicals also includes a mega project it is building at home with SABIC. The $20 billion project would build a complex that converts crude oil into chemicals directly, bypassing the refining stage.
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Re: KSA has peaked, cancels Aramco IPO

Unread postby Plantagenet » Fri 20 Jul 2018, 11:55:04

If KSA goes ahead with this, KSA will putting an ARAMCO-SABIC IPO on the market instead of the original sale involving just Aramco.


And your point would be??


It would no longer be the original and much ballyhooed IPO for just ARAMCO assets. KSA would now be sweetening the deal by offering a different IPO package involving both ARAMCO assets AND SABIC assets.

Get it now? :roll:

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 20 Jul 2018, 14:51:31

It would no longer be the original and much ballyhooed IPO for just ARAMCO assets. KSA would now be sweetening the deal by offering a different IPO package involving both ARAMCO assets AND SABIC assets.

Get it now? :roll:


as I said in my note there would be no immediate change in valuation. Any value added from SABIC assets would be offset entirely by the price paid for those assets. Given they are not buying producing reserves there is not much uplift to the purchase price that could be recognized in the financial analysis of assets.
So to be clear for those who are math impaired..... a net asset value of say $1.2 billion minus the cash required for the purchase of SABIC position (lets say $500 MM for argument) equals a net asset value of $700 MM plus the value of SABIC ($500 MM) results in a net asset value of $1.2 billion. It's a wash as we say in the business. It would have no meaningful impact on the IPO other than maybe intrinsically some investment houses might like to see Aramco with more downstream business to even out the impact of commodity price fluctuations (although they already have some).
This diversification was stated as part of the new Saudi plan announced by the new ruler well over a year ago. From the Aramco website:
To that end, investments in refining, chemicals, base oils, marketing, and power generation continue to be pursued to create additional value while diversifying risk. The development of a diversified, integrated, and robust business portfolio — in support of the company’s supply, trading, and marketing model — will serve to mitigate oil price fluctuations and generate additional revenues while simultaneously facilitating the expansion of opportunities for conversion industries, local manufacturers, and service providers.


in other words, this is just Aramco continuing on with its business plan announced quite a while ago (i.e. nothing new)
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