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Saudi Aramco IPO

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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Wed 22 Aug 2018, 14:04:31

mmasters wrote:I think it was all about needing the appropriate funding. When oil was low they were struggling financially so they came up with this as a way to get money in advance. Now that the price of oil is trending higher they're better off and feel they don't need to go down this path.

I'll buy that, and that was one of my first thoughts.

OTOH, that's short term thinking, and as a strategy it's likely to have VERY BAD results.

Strategically, the time to do such an IPO would be when prices are looking quite high. They get good value that way, and worst case, if prices go MUCH higher, they can sell another chunk if they wish. (This is one of my favorite strategies in the stock market. It requires patience in the timeframe of decades, though).

However, if whenever times get tough, they look at raising short term cash as a mitigation strategy, they get very poor value.

Given the way most corporations and many governments and, by far, most individuals operate, that might be happening. But again, as a strategy, it would be really stupid.

And as volatile as oil and geopolitical events are, I believe that assuming oil prices can only trend higher than here is quite risky. Currently that looks like a good bet -- but MANY things can change. One would be a meaningful, normal, economic downturn, given how long the US bull market has been this cycle.
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: Saudi Aramco IPO

Unread postby rockdoc123 » Wed 22 Aug 2018, 15:01:07

something I had mentioned before is if ARAMCO buys the investment fund part of SABIC then SA sees cash inflows of $70 MM but the total value of ARAMCO stays fairly static as the money paid (through debt or whatever instrument they choose) is offset by the increased value by bringing in additional downstream interests. If SA then chooses at some point to list ARAMCO through an IPO they then end up with a more money than they would have in the fund versus just doing an IPO, in essence they see two equity events, neither of which is diluted. Also what seemed to make sense to me is if they were not happy with all the hassle of doing an IPO and instead were interested in starting out with a listing on the local exchange it would be easy enough to do an RTO (reverse takeover) of SABIC which is already listed (as far as I am aware). They could then decide if it makes sense for them to dual list on another exchange which is a much faster approach than doing an IPO. But ARAMCO did say they were not interested in an acquisition of the public shares of SABIC so probably rules an RTO out for the time being.

all that being said I think I'll wait to hear what ARAMCO or MBS say. Definitely, something they cannot stay quiet on for very long given all the press is now pointing to the Reuters article. If they have canceled the IPO they are in a good place to reinitiate the process without having to build from scratch given much of the background work regarding financial and reserve audits have been completed meaning they could probably complete it in very short order if they so decided.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Wed 22 Aug 2018, 20:40:20

So Saudi Arabia is/was "struggling financially"?


Please show us where the Reuters article states that? If you are referencing the price crash down to the $30 range....everyone who produces oil was having a tough time regardless of how much oil they had in the ground.

The whole point of the argument now is that with oil prices hovering around $70/bbl WTI ($75 Brent) SA no longer has too many worries. They have stated they need $80/bbl to meet their budget target which includes no cuts to the various tax breaks, fuel subsidies, food subsidies etc that Saudis currently enjoy. They can easily cut back some without worrying too much about riots at the current prices and given the presumed influx from purchase of SABIC it is pretty hard to imagine they are "struggling financially"
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Wed 22 Aug 2018, 21:18:15

all that being said I think I'll wait to hear what ARAMCO or MBS say.


and lo and behold they did. As might be expected the Reuters report was misleading or as the President of the US would say "fake news"

https://www.cnbc.com/2018/08/23/saudi-aramco-ipo-riyadh-denies-its-scrapping-plans-for-listing.html

Saudi Arabia denies that it's scrapping Aramco IPO

Saudi Arabia denied media reports that the kingdom has scrapped plans to list shares of state-owned energy giant Aramco on stock exchanges.
Khalid al-Falih, the Saudi Minister of Energy, Industry and Mineral Resources and Chairman of Saudi Aramco, said in a statement on Thursday: "The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum."
"This timing will depend on multiple factors, including favorable market conditions, and a downstream acquisition which the Company will pursue in the next few months," al-Falih said.


It would be interesting to go to the website of the investment banks that were retained to advise on the IPO. My guess is if they were actually released from service that would be a "material event" as defined by the various exchanges they report to. As a consequence, they would have to release a press statement indicating what had transpired (rules of continuous disclosure). It doesn't matter if they signed a confidentiality agreement with Aramco or the gov't of SA as all of those agreements have a clause that states press releases are allowed and do not require approval if they are required by securities laws. So my view is if you don't see a press release from those banks then they weren't' actually "released". If you do then there should be some useful information included.
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Thu 23 Aug 2018, 20:13:47

Salman's ambitious plan to overhaul the Saudi economy.


Sounds menacing as in dismantling the Saudi Welfare State.

No wonder the IPO didn't happen.

Can KSA maintain oil production and maintain the welfare state?

Obviously not.

They will follow the same pattern as Venezuela. The Welfare State comes first and oil production will drop and then totally collapse.

And the timing of the IPO now states when it will happen by 2021.

In other words, KSA is bankrupt.
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Thu 23 Aug 2018, 20:16:28

rockdoc123 wrote:
So Saudi Arabia is/was "struggling financially"?


Please show us where the Reuters article states that? If you are referencing the price crash down to the $30 range....everyone who produces oil was having a tough time regardless of how much oil they had in the ground.

The whole point of the argument now is that with oil prices hovering around $70/bbl WTI ($75 Brent) SA no longer has too many worries. They have stated they need $80/bbl to meet their budget target which includes no cuts to the various tax breaks, fuel subsidies, food subsidies etc that Saudis currently enjoy. They can easily cut back some without worrying too much about riots at the current prices and given the presumed influx from purchase of SABIC it is pretty hard to imagine they are "struggling financially"


Except for the reality that Ghawar is headed into much higher decline rates by 2020. Thats the purpose of the IPO: to shitcan the Welfare state so they can still do something before its too late.

But what fool in KSA would want the welfare state to ever end? For the useless crap called "renewables"?
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Thu 23 Aug 2018, 21:06:46

Except for the reality that Ghawar is headed into much higher decline rates by 2020.


OK please show us what those "higher decline rates" are. While you are at it maybe you can show us what the "decline" rates for Ghawar are now? I suspect firstly you don't know what "decline" in oil and gas terminology means and secondly you are doing some wildass speculation given there isn't anything published on changing rates of individual fields in SA.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Thu 23 Aug 2018, 21:12:01

And the timing of the IPO now states when it will happen by 2021.


where does it state that? Not in the article I linked to and you link to nothing.

In other words, KSA is bankrupt.


that is just stupid. Bankrupt infers debt that can't be paid. The Saudis currently have almost zero debt. Their only issue has been subsidizing much of the average Saudi lifestyle with their budget. Given the size of their foreign accounts and the investment fund you pretty much have to be a complete idiot to suggest they are bankrupt. Oh wait a minute...I guess that explains it all. :roll:
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Re: Saudi Aramco IPO

Unread postby ROCKMAN » Fri 24 Aug 2018, 09:19:23

“Khalid al-Falih, the Saudi Minister of Energy, Industry and Mineral Resources and Chairman of Saudi Aramco, said in a statement on Thursday: "The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum." Which could be a “true” statement made by any publicly corporation (or privately owned corp) on any stock exchange in the world. Thus a universal truth and as such means nothing. If the Rockman wanted to takes consulting business public he could make the same identical statement.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 24 Aug 2018, 09:47:21

Which could be a “true” statement made by any publicly corporation (or privately owned corp) on any stock exchange in the world. Thus a universal truth and as such means nothing.


What it means is that they did not "call off the IPO" as Reuters suggested and the statements they made:

Saudi Arabia has scrapped plans to list shares of its state-owned energy giant Aramco on stock exchanges.


and

The kingdom will no longer seek to publicly list shares on its domestic stock market, the Tadawul, or on foreign exchanges.


are not based on truth. al-Falih was simply addressing the claims made in Reuters and his statements have to be taken in that context

And to be factual your statement:

Which could be a “true” statement made by any publicly corporation (or privately owned corp) on any stock exchange in the world.


is incorrect given a company that is already a public corporation would not "remain committed to an IPO", the fact they are already trading precludes that possibility.

What separates ARAMCO from all the other private companies is they have actually done all the heavy lifting to get to where an IPO can be executed.
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Fri 24 Aug 2018, 20:22:03

Got this book. Can't post quotes because of copyright but states that solar PV is a total failure in Iraq. So it wont work in KSA either. How will KSA ever generate electricity other than oil? America can no longer afford *any* nuclear plants and KSA will never be allowed to operate someone else's nuclear plant builds.

The entire basis of my 'Oil Apocalypse' is based on the massive confusion between decline rate and depletion rate. Plus the impossibility of financing more expensive oil when the cheap oil goes into steep decline. Exxon Mobil not long ago walked away from the Tar Sands as 'Uneconomic crap'.

Total collapse is guaranteed by 2023. The suckers tasked with keeping the lights on in America have already stated that load shedding is guaranteed by 2023. In other words the lights are going off.

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Re: Saudi Aramco IPO

Unread postby StarvingLion » Fri 24 Aug 2018, 20:31:41

"The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum."


Yeah they'll want to do the IPO about 20 minutes before the Welfare State would collapse anyway. Shale oil and KSA will collapse together.

In other words, same as everywhere else,,,,,KICK THE CAN.
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Fri 24 Aug 2018, 20:39:53

Still not seeing worldwide Shale oil development.

And gosh knows Coffeeguyz is getting for frantic by the day with his "Fuzzy guys are going wild with MOF's".

He must know something. As in better transform transport to ng.

Lets see, the oil that no longer exists used to pay for ng. And the permabankrupt Shale Gas "industry" will keep going with massive decline rates and little oil to pay for it?

Okay, send in
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 24 Aug 2018, 23:18:07

OK suddenly everyone is supposed to respond to Starving Lion's ridiculous diatribe?

I am sorry, but if you actually care about what anyone thinks about your posts ...you are a complete blithering idiot.

You continually make comments with no back up from anywhere....it is just your crazy ass opinion.

But it doesn't' stop you when you get called out for being a complete idiot.

Is there actually anything you want to add to this thread (or any thread for that matter) that is useful?

I am wondering what is your motivation.
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Sat 25 Aug 2018, 20:38:01

rockdoc123 wrote:OK suddenly everyone is supposed to respond to Starving Lion's ridiculous diatribe?

....

Is there actually anything you want to add to this thread (or any thread for that matter) that is useful?

I am wondering what is your motivation.

I would guess that it's trolling. Which means we'd be best off by not responding, unless and until he changes his behavior.

Which might be "unfair", considering that for example, pstarr (IMO) gets away with a lot of similar behavior, but gets responses because he's been around for a long time and USED to make quite a few posts with merit.
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: Saudi Aramco IPO

Unread postby ROCKMAN » Sun 26 Aug 2018, 11:18:49

Outcast - I view it differently. I see our pissed off kitty as comic relief. Our subject matter here can often prove somewhat depressing. Why I always read his posts: often brings a smile.
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Tue 28 Aug 2018, 20:12:05

Will rockdoc tell us of the Shale Gas "Revolution" in KSA with NO WATER? Hows that dry drilling going?

Will rockdoc tell us of the useless PV Solar Panels in KSA that are covered with DUST?

Will the Private Investment Fund "invest" in more scams like Uber?

Bankrupt.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 28 Aug 2018, 22:21:03

Will rockdoc tell us of the Shale Gas "Revolution" in KSA with NO WATER? Hows that dry drilling going?


apparently, you haven't heard about the use of seawater in fracking, a recent global development. Or you probably missed out on the fact they have extensive desalination plants that are now being converted to run on natural gas. And you probably also missed out on the news about closed containment fracking systems. :roll:

Will rockdoc tell us of the useless PV Solar Panels in KSA that are covered with DUST?


perhaps you need to give us all some information on that. SA use of solar-generated power has steadily been increasing although not to the level they want. They have special accommodations that need to be made due to the high direct irradiance (cooling) but sandstorms have been dealt with in many parts of the world on much larger solar arrays.

Will the Private Investment Fund "invest" in more scams like Uber?


you mean like the US-based infrastructure projects they entered into with GE, Lockheed Martin and Blackstone Group? :roll:
I doubt there is an investment fund in the world where you can't identify several failed investments, that's why they have a portfolio just like anyone who is invested in the market.
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Wed 29 Aug 2018, 20:06:39

Is Wall Street (NY State) using American Shale Gas or is it importing it from Russia/Middle East?

If its not using American Shale then the "Federal" "Reserve" has abandoned the currency they are supposed to protect.
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Thu 30 Aug 2018, 19:38:42

StarvingLion wrote:Is Wall Street (NY State) using American Shale Gas or is it importing it from Russia/Middle East?

If its not using American Shale then the "Federal" "Reserve" has abandoned the currency they are supposed to protect.

Kind of like you abandon reality every time you post?

How about trying some credible citations for your various random/wild claims?

Since when does the Federal Reserve decide where money gets spent? Especially by private entities?

If they allow massive USD inflation over a period of years and fail to stem it, THEN get back to us on how they have "abaondoned" the currency.

The delusion is strong in you recently.
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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