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THE Saudi Arabian Oil Co. (ARAMCO) pt 3

General discussions of the systemic, societal and civilisational effects of depletion.

Re: THE Saudi Arabian Oil Co. (ARAMCO) pt 3

Unread postby Tanada » Fri 19 Jan 2018, 08:57:45

Does anyone know what the real break even profit is for KSA? I see guesstimates ranging anywhere from $65/bbl all the way up to $115/bbl. I don't normally think in terms of a nation with only one source of income, the USA has taxes on a great number of things each generating a unique income stream.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: THE Saudi Arabian Oil Co. (ARAMCO) pt 3

Unread postby rockdoc123 » Fri 19 Jan 2018, 10:59:27

Does anyone know what the real break even profit is for KSA? I see guesstimates ranging anywhere from $65/bbl all the way up to $115/bbl. I don't normally think in terms of a nation with only one source of income, the USA has taxes on a great number of things each generating a unique income stream.


A couple of things, normally when we talk about break even it refers to how much it costs to find and produce and make just more than NPV=0. In that case, the number in Saudi Arabia is quite low (about $9/bbl). I suspect what number you are looking for is the price that is required to fully balance their current budget. According to the Saudis (just last month), $70/bbl Brent fully balances their new increased budget for 2018, that is assuming the new lower royalty rate and that they see no increase in non-oil income (which increased significantly last year and is expected to do the same this next year). It also ignores the income from the IPO (which of course goes to Aramco not SA). If you look at their revised budget they are hell-bent on diversifying the economy and hence willing to spend more now in the belief it will improve their economy down the line. At $60 Brent they were predicting a balanced budget by 2022 assuming no price increase.
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Saudi Aramco international share sale might never happen

Unread postby AdamB » Sun 11 Mar 2018, 14:20:38


(Reuters) - (John Kemp is a Reuters market analyst. The views expressed are his own.) Saudi Aramco’s [IPO-ARAM.SE] partial privatization has loomed over the oil market for the last two years, influencing expectations about oil prices, but what if it never happens? The possibility of selling a minority stake in the giant oil company was first mentioned in a newspaper interview published in January 2016 by then-Deputy Crown Prince Mohammed bin Salman. The possibility merited little more than a brief mention in a section about economic reforms, diversification and privatization of state assets. (“Interview with Muhammad bin Salman”, Economist, Jan. 6, 2016). But this passing reference has spawned an enormous amount of activity from consultants, bankers, stock exchanges, governments and journalists all competing to benefit from the sale of the century. Saudi Aramco has reportedly prepared a set of corporate accounts to international standards and .


Saudi Aramco international share sale might never happen
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The Truth About Aramco’s $2 Trillion Valuation

Unread postby AdamB » Sat 17 Mar 2018, 23:09:20


Two trillion dollars: this was the price tag Riyadh put on the jewel in its crown, state oil and gas giant Aramco. This is how much the company was worth, officials said, if you multiplied its proven reserves by a factor of US$8, which is the figure used to value oil and gas reserves. There were doubts about that valuation from the start, and now these are deepening as the company crawls closer to the initial public offering. For starters Aramco’s opacity was very likely to make potential investors suspicious. Aramco has never published financial reports. Although there were assurances that it will start doing so ahead of the IPO, to date the latest entry on Aramco’s Corporate Reports page is from July 20 last year, and includes production figures for 2016. Last year, sources had told Reuters the company was planning


The Truth About Aramco’s $2 Trillion Valuation
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Re: THE Saudi Arabian Oil Co. (ARAMCO) pt 3

Unread postby ROCKMAN » Sun 18 Mar 2018, 16:41:47

“This is how much the company was worth, officials said, if you multiplied its proven reserves by a factor of US$8, which is the figure used to value oil and gas reserves.” As of today Aramco does not own 1 bbl of oil reserves sitting under Saudi Arabia. It has a production sharing agreement with the Saudi govt. Aramco’s value would be based upon its future NET income from its share of that revenue stream. Aramco is a company…it is not the country of Saudi Arabia. This has been a problem for US public companies wanting to participate with PEMEX developing Mexican reserves. Those companies have not been allowed to book proved reserves as assets because the oil/NG does not become their property until it flows out of the well head. A deal killer for a typical public company.

Similar to most foreign oil/NG concessions: A company, such as Aramco, has the right to drill for and produce the hydrocarbon reserves owned by the host country. The company pays 100% of all development and production costs including its overhead. As the oil/NG is produced and sold the revenue is split between the company and the govt. Currently the Saudi govt receives 85% of the revenue stream with Aramco getting 15%. Out of its 15% Aramco pays for all current and future production and development activity in the concession.

The Saudi govt has said it will reduce its share of the revenue to 50% with Aramco receiving 50% when the IPO is placed. Of course, Aramco’s net income will be reduced by all the operational costs it incurs in the concession. It is that net income from which Aramco MIGHT pay dividends but as of yet no yield has been promised. That will be determined by the board of directors. A board elected by the Saudi govt. Aramco could also retain 100% of its net for future operations. Likewise at any time the Saudi govt can tax Aramco’s share of the revenue stream at any rate it chooses.
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Re: THE Saudi Arabian Oil Co. (ARAMCO) pt 3

Unread postby vtsnowedin » Sun 18 Mar 2018, 17:40:28

Rockman? If I read you correctly you will not be investing a single dollar of you own assets in the public offering of ARMCO.???
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Re: THE Saudi Arabian Oil Co. (ARAMCO) pt 3

Unread postby ROCKMAN » Mon 19 Mar 2018, 13:56:45

No...too old to play such foolish games. LOL.
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