pstarr wrote:What idiot would purchase shares in collapsing company?
Tesla ring a bell?
pstarr wrote:What idiot would purchase shares in collapsing company?
Now, analysts at Wood Mackenzie have conducted their own study of Saudi Aramco, and came up with a completely different (and much lower) figure. WoodMac puts Aramco’s true value closer to $400 billion, eighty percent less than the Saudi estimate, and it arrived at the figure by considering future demand and the anticipated average price of oil (on which profits will depend), as well as Saudi Aramco’s status as a state-run company.
Cooking The Books? Saudi Aramco Could Be Overvalued By 500%
WoodMac doesn’t dispute the figure of 261 billion barrels lying under Saudi Arabia and just offshore; that figure has been confirmed by independent sources. Where things get complicated, though, is in the management and taxation of Saudi Aramco, which does not release financial statements. It is known that the company, which is the bedrock of the Saudi economy and the major foundation for state finances, pays a twenty percent royalty on revenues and an 85 percent income tax, supporting the Saudi government and providing a living for the 15,000 members of the Saudi royal family. Tax commitments of that size could have a major impact on the company’s profitability, leaving little in dividends, a factor WoodMac considered in its valuation.
Cog wrote:pstarr wrote:What idiot would purchase shares in collapsing company?
Tesla ring a bell?
but I guess is way past peak and all this pissing around with non disclosure of reserves, dire need for capital, etc etc just about proves it.
Peak oil is the theorized point in time when the maximum rate of extraction of petroleum is reached, after which it is expected to enter terminal decline
Would YOU (anyone ?) invest money in a venture where the main reason for that investment,the asset that generates profit, is not disclosed ?
There has [sic] been numerous interviews with the oil minister as well as with the CEO of Aramco as well as comments from investment bankers that the intended reason for purchasing SABIC was to accomplish the goal ARAMCO has always stated as having...increase it's downstream component so that it becomes more like the integrated company it aspires to be which would be not so heavily weighted to the upstream component as they are now.
Actually, the reason Aramco is planning to purchase SABIC is the same reason Aramco had for the doing the much-delayed IPO---the royal family wants money. When it became clear the IPO wasn't happening any time soon they switched to the plan to buy SABIC.
Saudi Aramco’s planned acquisition of a majority stake in Sabic, the Saudi state-controlled chemicals and materials group, is central to its plans to diversify its revenues and prepare for tighter constraints on greenhouse gas emissions, its chief executive says. Amin Nasser, who has been chief executive of the Saudi national energy company since 2015, told the Financial Times that talks were at an “early stage”, but that the Sabic deal would help accelerate Saudi Aramco’s plans to develop its chemicals operations. “Sabic has a strong market position, [and is] vertically integrated: there’s a lot of synergy with Saudi Aramco,” Mr Nasser said. Though some senior executives at the group have questioned how it adds value, he said: “It’s a very strategically [good] fit with what we are aspiring to be, which is [to be] deeper in the downstream sector.”
In truth, Saudi Aramco is already working with SABIC on the fully integrated crude oil-to-chemicals (COTC) complex. Saudi Aramco wants to move away from being just an exporter of crude and to use its oil to create petrochemicals and fuel for export — to become an integrated energy company. Owning a major stake in SABIC would give Saudi Aramco a quick boost toward that goal.
At this time, whatever impact the sale of the SABIC assets will have on the Saudi PIF, there is no necessity in the transaction. Current oil prices are above $70 per barrel, which is helping to reduce the budget deficit, and the Kingdom is surging ahead with all planned upstream and downstream projects. In May, Moody’s reaffirmed the Kingdom’s A1 credit rating. The Saudi economy is stable and economic reforms are moving apace.
The PIF and Saudi Aramco are all wholly owned by the Kingdom. It is not logical that shifting liquidity between entities both belonging to the same owner should be interpreted as some sort of lifeline for the PIF.
This acquisition is an excellent tactical, developmental approach for the following reasons:
1) Saudi Aramco has a plan for continued growth in refining and petrochemicals capacities, which represents a pivotal role for non-oil revenues, essential for a diversified and sustainable economic future.
2) Integrated refining and petrochemical projects provide greater opportunities for enhancement of hydrocarbon streams and improved profitability.
3) Saudi Aramco’s acquisition of stakes in petrochemical plants is part of its ambitious strategic plan to become a leading global integrated energy and chemical company, which will boost non-oil revenues, the hub of the Kingdom’s Vision 2030.
4) The growing petrochemical sector in the Kingdom provides many direct and indirect jobs. The refining and petrochemical sector is one of the largest non-governmental sectors that have the highest percentage of Saudi employees.
"leveraged buyout" huh?
They really are broke
Saudi Arabia's massive oil and gas reserves are even bigger than previously reported, according to an outside assessment commissioned by the kingdom.
The independent audit not only revised Saudi reserves higher, but may help put to rest skepticism over the nation's oil and gas wealth, which has persisted in some corners of the market for years. It also shows national oil giant Saudi Aramco is taking strides towards transparency as it continues to consider a stock market debut.
State-controlled Aramco had 263.1 billion barrels of oil waiting to be tapped at the end of 2017, according to Dallas-based petroleum consulting firm DeGolyer and MacNaughton. That is 2.2 billion barrels more than Aramco reported in its last annual review.
Aramco's natural gas reserves total 319.5 trillion cubic feet, according to the audit. The company, which is not a major player in the gas market, previously reported 302.3 trillion cubic feet of gas reserves.
Saudi Arabia has additional reserves in an area along the border with Kuwait that has sat idle due to a dispute between the neighbors. Including this so-called Neutral Zone, Saudi oil reserves total 268.5 billion barrels, DeGolyer and MacNaughton concluded. That compares with an earlier estimate of 266.3 billion barrels.
rockdoc123 wrote:https://www.cnbc.com/2019/01/09/saudi-arabias-massive-oil-reserves-grow-by-2point2-billion-barrels.htmlSaudi Arabia's massive oil and gas reserves are even bigger than previously reported, according to an outside assessment commissioned by the kingdom.
Saudi cannot finance oil expansion because decline rates at NorthCentral Ghawar will increase massively long before the new infrastructure is in place.
Just a few weeks ago, Aramco announced the results of an audit by DeGolyer & MacNaughton, the leading independent expert on the oil industry, which showed Aramco is sitting on a treasure trove of 263.1 billion barrels of oil within its concession area, higher than previous estimates. That was one of the essential requirements for the IPO.
“Everything that is required for listing is there. If the government decided, it could be done in no time,” he said. So why had it not happened?
Basically, Nasser explained, because an alternative strategic play came into view. Aramco decided there were more pressing priorities, especially a tie-up with SABIC, the Kingdom’s petrochemicals and industrial giant.
“We came to the government and said that our desire is to be the leading petrochemical company globally. We can do that organically or inorganically. We are always looking for opportunities in this field and we have huge investments in petrochem with Dow Chemical and Sumitomo. However, if you want to be the leader, you need an acquisition, a major acquisition. You need a platform, a good platform so you can go global, especially with our decision to have 2 million to 3 million barrels of oil going to petrochemical.
“So we approached the Public Investment Fund (Saudi Arabia’s ambitious sovereign wealth fund) to see if it was interested in selling their shares in SABIC, and they were interested. We have been in discussions with them and we went back to the government and said … based on our governance requirements and regulations, you cannot list Aramco while we are going through a major acquisition. It doesn’t work. That process needs to take its course, and the government said that’s fine. Because also you cannot list and then come in three or four months later and say you’re going to acquire a company. That would have to be in the IPO prospectus.
We need to close a share-purchase agreement and we’re in discussions now with PIF about that. When we reach an agreement we have to go and seek regulatory and antitrust approval. That will take almost until the end of the year 2019, or maybe a little bit more; we don’t know because you need approval from a lot of countries where SABIC has major operations. SABIC is not a small company, it’s a huge company, so you need a lot of approvals from lots of countries,” he said.
“After you finish that you need a minimum of one year to reflect the purchase in your balance sheet. It has to be consolidated and show what is the impact on our balance sheet — where is the integration, where is the value, because the investors will want to see … After that you can go to the market,” he said.
“It’s going to happen. There is no doubt the commitment is there, and it was also further confirmed by the Crown Prince Mohammed bin Salman and by the Minister of Energy Khalid Al-Falih. Both of them say the commitment for the IPO is there,” he insisted.
... an interview with Amin Nasser, CEO and President of Saudi Aramco at the WEF in Davos a few weeks ago:
“Everything that is required for listing is there. If the government decided, it could be done in no time,” he said. So why had it not happened?
Basically, Nasser explained, because an alternative strategic play came into view. Aramco decided there were more pressing priorities
“It’s going to happen. There is no doubt the commitment is there, and it was also further confirmed by the Crown Prince Mohammed bin Salman and by the Minister of Energy Khalid Al-Falih. Both of them say the commitment for the IPO is there,” he insisted.
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