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Saudi Aramco IPO

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 20 Jul 2018, 18:19:15

Actually, ARAMCO has so far failed to successfully offer its IPO and appears to be on the brink of abandoning their plan to do an IPO at all. The original plan for the IPO was announced back in January 2016----two and half years ago. The IPO has been postponed a couple of times now, and currently there isn't even a scheduled date for the IPO---the failure to do the IPO in a timely fashion as they planned marks a rare business failure by ARAMCO. And a recent news account in the WSJ said high level people in ARAMCO are now leaning towards not doing the sale at all now---a very large change of plans if the WSJ is right (see the link and my cogent discussion of this news above).


the last time you posted this you claimed ARAMCO was canceling the IPO and also made some other claims that were not in the article you referenced...that hardly qualifies as "cogent", illiterate maybe but cogent..no. Nothing has changed. They are waiting on the right time and venue which makes perfect sense given oil prices were in the $40 range when they first announced the IPO and they are now hovering above $70. Not a business failure at all, a business failure would have been pulling the trigger on the IPO back when all the audits were done a year ago and missing out on a ~40% uplift on valuation due to rising prices. And who are these "insiders", no doubt one of the senior folks they sacked a couple of years ago who are forever being touted as "insiders" and have continually made incorrect comments about Saudi production capacity. In the end, ARAMCO will do what makes the most money for them, if that is bringing in someone else to share the CAPEX exposure and allow them to invest in other areas or whether that means postponing the IPO and making hay while the sun shines oil price wise.

The mostly likely reason for the postponement and likely cancellation of the planned ARAMCO IPO is that ARAMCO isn't worth what the Saudis think it is worth. Based on their public statements the Saudi Royal Family had been wildly overestimating the value of ARAMCO and what it would bring in the planned IPO. The actual value of the planned IPO is likely only about 20% of the Saudis royal had been claiming, making it much less attractive for them and hence less likely they'll go forward with it all.


well first off there is no indication whatsoever of a "likely cancellation", that is complete BS. The reserve audits done by two different companies (and the largest at this worldwide) indicated their reserve assessments were in-line with what the Saudis had been reporting to the public. The valuation will be dependent mainly on Proven and Probable reserves (audited), financial analysis that basically comes down to net back on a barrel (audited) and to a very much lesser extent the valuation on processing and other downstream revenues (which would also be audited). These are all price dependent. When the Saudis went into the IPO process with eyes wide open (they have international lawyers and banks working with them, they know all there is to know about requirements for disclosure etc) oil was much, much cheaper than it is now. If they over-estimated total valuation a year or so ago it very likely they are now underestimating it given the rise in commodity price.

If there is any reason why they are stalling it is likely because they are not sure if they actually need to do an IPO anymore. They are sitting on a windfall of cash they did not anticipate a year or more ago. If they can balance their budget going forward 5 years with current revenues they probably do not see a need to do an IPO at this moment. That being said having done all the ground work to put one in place they could pull the trigger with a relatively short time frame to actually be listed somewhere. I've been involved in a few IPO/RTO in the past. The biggest problem is if you are working from scratch it can take you up to a year to get everything done to list and the window around market cycles, price cycles, investor mentality, etc. is often shorter. Being in a position to pull the trigger when everything is coming up roses is enviable.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Fri 20 Jul 2018, 18:41:34

...ARAMCO was canceling the IPO


I linked to a recent Wall Street Journal article that said senior officials at ARAMCO oppose going ahead on the IPO. Read the link---its in my post upthread.

no. Nothing has changed.


Actually, there have been some important changes. The IPO has been postponed twice and now isn't even scheduled to happen. Thats a large change from KSA officials saying they were definitely going to do an IPO way back in 2016. And then saying it again in 2017 and 2018. IPOs typically take about 6-9 months to do. ARAMCO is now 30 months out from the announcement of their IPO, with no date for the IPO in sight.

And, as I pointed out when I linked to the news story about the SABIC deal, the proposed purchase of SABIC is odd if ARAMCO is planning to go ahead soon with the IPO as they claim they are planning to do, because investors would want the SABIC deal to be done and the re-organisation completed before the IPO gets offered so as to know how to price the IPO. The SABIC deal, if it goes ahead, is just going to delay the IPO even more. Its bad news for those people who believed the iPO was going to happen, at long last, in 2018.

saudi-aramco-considering-sabic-stake-is-bad-news-for-an-IPO

Think about it----if ARAMCO is serious about doing the SABIC deal then they aren't going to get the ARAMCO IPO out to market again this year---a major change from their initial business plan of doing the IPO way back in 2016-17. At this rate the earliest the ARAMCO IPO could go to market is in 2019----if it happens at all. And according to the WSJ some top officials at ARAMCO don't want the IPO to happen at all.

Get it now?

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Re: Saudi Aramco IPO

Unread postby onlooker » Fri 20 Jul 2018, 19:05:27

Sorry to butt in but this is interesting from an investor:

Everyone in Aramco is all but certain the IPO is not going to happen.

$2+ trillion valuation unacceptable to the market.

Risks too great for a U.S. listing.

KSA's relationship with the U.S. is the cornerstone for Saudi Arabia's survival and prosperity.

https://seekingalpha.com/article/418601 ... dying-vine
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 20 Jul 2018, 19:37:47

Everyone in Aramco is all but certain the IPO is not going to happen.


According to unnamed sources? Are you serious? :roll:

$2+ trillion valuation unacceptable to the market.


well that's interesting given the "market" has not been tested because there is yet to be a listing. Who is this "market" seeking alpha (which as far as I'm concerned aren't much better than Goldbugs) references? The fact that there are still a bunch of investment banks fighting each other to get the right to be involved and the various exchanges are still courting an Aramco listing pretty much tells you this is complete and unadulterated BS. The price will be set when the IPO is actually finalized. And it will be higher than it was 6 months ago that is certain.

Risks too great for a U.S. listing.


I spoke to this on another thread. Aramco is worried about being tied up in the class action suits regarding 911 and rightfully so. But who actually cares? They can list on London and a number of other exchanges that would give them just as much liquidity if they were listed on the NYSE. I actually believe it isn't in their best interest to list on US exchanges. They already have a ton of money invested in the US. Listing Aramco there decreases their ability to use those investments as leverage to my mind. If they listed on the TSX and on London along with the local Arab exchanges they would be fine.

KSA's relationship with the U.S. is the cornerstone for Saudi Arabia's survival and prosperity.


Unless they decide it is better to befriend Russia and China. I am sure they see the current gov't in the US as being "unstable" in terms of foreign policy so I suspect they are looking at other options. I think the US has a tendency to think they are more important than they really are.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 20 Jul 2018, 19:55:38

I linked to a recent Wall Street Journal article that said senior officials at ARAMCO oppose going ahead on the IPO. Read the link---its in my post upthread.


the same article you linked to on the other thread where I wasn't the only one telling you that your interpretation of the article was completely off kilter. Is your memory that short or is it that you think we all forget that easily?

Actually, there have been some important changes. The IPO has been postponed twice and now isn't even scheduled to happen. Thats a large change from KSA officials saying they were definitely going to do an IPO way back in 2016. And then saying it again in 2017 and 2018. IPOs typically take about 6-9 months to do. ARAMCO is now 30 months out from the announcement of their IPO, with no date for the IPO in sight.


Oh for F's sake. The last time you posted this it was the exact same situation....hence nothing has changed since a few people sorted you out as to reality. Did you not read what I posted? There is a good reason to sit and wait on pulling the trigger on an IPO. And exactly how many IPO's have you been involved with? Apparently, zero given when you have a company like Aramco which is private and complex there is absolutely no way you can get everything in place in 6-9 months. You can't even do an RTO in North America when all your books are in order and you have a reserve report in that time frame. The reserve report alone would have taken more than a half year to complete.

because investors would want the SABIC deal to be done and the re-organisation completed before the IPO gets offered so as to know how to price the IPO. The SABIC deal, if it goes ahead, is just going to delay the IPO even more. Its bad news for those people who believed the iPO was going to happen, at long last, in 2018.


I'll give you the break that you probably have no experience in this sort of thing. There is no "re-organization", Aramco is simply taking a "position" in SABIC which by the very nature of that term means there is no change of control. This is just normal investment as anyone would expect to continue to happen. As I said above (unless you can argue "cogently" diffently) there is in effect no change in valuation associated with this piece of business. And the valuation is all that matters because the IPO will be fully subscribed by banks...you will not have the opportunity as a single investor to buy anything until it is actually on the market and screaming higher for the next few days or weeks until there is the typical post-listing correction.

Think about it----if ARAMCO is serious about doing the SABIC deal then they aren't going to get the ARAMCO IPO out to market again this year---a major change from their initial business plan of doing the IPO way back in 2016-17. At this rate the earliest the ARAMCO IPO could go to market is in 2019----if it happens at all. And according to the WSJ some top officials at ARAMCO don't want the IPO to happen at al


Oh for Christs sake. Their business plan was to do an IPO at some point, it did not have an exact time frame and the fact oil prices were changing rapidly affected that. Are you that stupid that you think they would go ahead with an IPO when they could potentially lose 40% uplift on valuation (which is where they sit right now)? And "according to WSJ some top officials"....please spare us the BS. Nobody is named and as I said previously their sources are typically ex-Aramco folks with issues.

BTW as I said a couple of times above the SABIC deal ends up being "cash in - cash out" ...it will have almost zero impact on an IPO. Do you actually think companies stop doing business during the IPO process? :roll:
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Fri 20 Jul 2018, 21:38:08

onlooker wrote:Sorry to butt in but this is interesting from an investor:

Everyone in Aramco is all but certain the IPO is not going to happen.

$2+ trillion valuation unacceptable to the market.

Risks too great for a U.S. listing.

KSA's relationship with the U.S. is the cornerstone for Saudi Arabia's survival and prosperity.

https://seekingalpha.com/article/418601 ... dying-vine


I know. I’ve been reading the same things for a while now in very reputable news sources like the Wall Street Journal, FT, CNN etc. But crocdoc is convinced the aramco businss plan to do an IPO is immutable in spite of the fact that they’ve delayed, postponed and so far failed for 3 years to execute their business plan to do an IPO, first in 2016, then in 2017, and now again in 2018

He apparently thinks we’re still back in 2016 and the IPO is going to happen any day now.

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Sat 21 Jul 2018, 10:35:00

He apparently thinks we’re still back in 2016 and the IPO is going to happen any day now.


as usual, you either don't read what is being said or your literacy skills are seriously challenged.

answer this question....why would Aramco go forward with an IPO when they are certain commodity prices are rising? If it makes sense to you that they should have then I suspect it is best you stay away from any sort of commercial enterprise in the future.

as I said above a couple of times the valuation is mainly dependent on their oil reserves....a 40% uplift on the price deck between when they started down the road and today is a pretty significant uplift on what the IPO would be worth.

but I guess it's more palatable for you to go and search out all sorts of nefarious conspiracy theories....so far you have claimed the IPO was canceled, Aramco canceled it because they were worried about disclosure and that Aramco was not worried about the 911 class action suit and the valuation is too high (when in fact prices are now much higher than when that valuation was done) ...all opinions which are basically dumb. :roll:
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Sun 22 Jul 2018, 00:00:28

why would Aramco go forward with an IPO when they are certain commodity prices are rising?


I suggest you answer your own question.....after all, you are the one insisting that ARAMCO is going ahead with the IPO, not me.

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Re: Saudi Aramco IPO

Unread postby StarvingLion » Mon 23 Jul 2018, 16:55:05

Saudi Arabia is bankrupt. Why doesn't rockdoc tell us why they are buying nuclear reactors they cannot build.

Ghawar is toast.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 23 Jul 2018, 17:00:01

Saudi Arabia is bankrupt.


They have a sovereign wealth fund currently valued at $230 billion dollars and reserves of $500 billion dollars. If that is bankrupt in your book then I think you need some accounting courses :roll:
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Mon 23 Jul 2018, 17:06:12

rockdoc123 wrote:
Saudi Arabia is bankrupt.


They have a sovereign wealth fund currently valued at $230 billion dollars and reserves of $500 billion dollars. If that is bankrupt in your book then I think you need some accounting courses :roll:


I think the US has a tendency to think they are more important than they really are.


Now rockdoc admits America is bankrupt. Now he's pinning his future on the next Venezuela.

Why are they buying nuclear reactors they cannot build themselves. They're broke and cannot even afford their own electricity.
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Re: Saudi Aramco IPO

Unread postby onlooker » Mon 23 Jul 2018, 17:10:00

StarvingLion wrote:Saudi Arabia is bankrupt. Why doesn't rockdoc tell us why they are buying nuclear reactors they cannot build.

Ghawar is toast.

And of course it's coincidence that they're diversifying away from oil in earnest :P :lol:
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Mon 23 Jul 2018, 17:15:03

rockdoc went from Shale "oil" is the greatest thing to jumping on a camel headed for KSA. About as safe as the EV Kook driving around in bankrupt cities in America.

And the other "expert" is still peddling Texas Wind Scam.

When is rockdoc going to tell us what that energy source is after oil and gas that he believes in.

He believes in investing in war zone called KSA.

Talk about desperate.
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Re: Saudi Aramco IPO

Unread postby onlooker » Mon 23 Jul 2018, 17:18:30

StarvingLion wrote:rockdoc went from Shale "oil" is the greatest thing to jumping on a camel headed for KSA. About as safe as the EV Kook driving around in bankrupt cities in America.

And the other "expert" is still peddling Texas Wind Scam.

When is rockdoc going to tell us what that energy source is after oil and gas that he believes in.

He believes in investing in war zone called KSA.

Talk about desperate.


Or maybe he's got his fancy bunker all set up, to ride out the storm 8)
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 23 Jul 2018, 17:27:43

Why are they buying nuclear reactors they cannot build themselves. They're broke and cannot even afford their own electricity.

And of course it's coincidence that they're diversifying away from oil in earnest :P :lol:


both incredibly stupid comments. Saudi Arabia does not have massive gas reserves but they have massive power demands including desalination. IF they use fuel oil to power generators that is less oil that they can sell on the open market. With oil prices rising and the cost to build nuclear facilities remaining low it makes perfect economic sense to offset diesel power with nuclear power. They have been exploring for gas but so far have not come up with enough to serve their needs. It is basic economics.

rockdoc went from Shale "oil" is the greatest thing to jumping on a camel headed for KSA. About as safe as the EV Kook driving around in bankrupt cities in America.


at some point people get weary of your drooling, blithering idiot routine. IF you have some facts to discuss where you can actually put together a sentence that is reminiscent of the english language, please do.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Tue 24 Jul 2018, 00:54:15

ARAMCO changes their business plan again---now they will buy a controlling stake and take over SABIC and merge it with their own operations.

Has-Saudi-Arabia-Fooled-Oil-Analysts

This will accomplish two things:

(1) Orginally ARAMCO was going to buy a small interest in SABIC but leave the company under its current management. Under the new KSA plan ARAMCO will buy the 70% of SABIC owned by the KSA state, i.e. ARAMCO will takie over SABIC. This will totally change the way the internal oil market works in KSA and make ARAMCO dominant in BOTH upstream and downstream oil operations in KSA

(2) ARAMCO buying the 70% of SABIC shares controlled by the KSA government will funnel a big hunk of cash money into the royal coffers for the modernization program. This removes the need for the KSA government to do the ARAMCO IPO to get cash money from the international market to pay for their Modernization program---they'll get a big slug of money internally to use for modernization when ARAMCO pays for the SABIC shares.

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 24 Jul 2018, 10:18:27

You insult everybody who disagrees with you, lord over us all with your degree and phony title. A real oil professional who was confident in his knowledge would be friendly and open to ideas. See Rockman. A real oil industry expert and a real gentleman :)


apparently, he suffers fools gladly.. :roll:
Life's too short for that IMO

and apparently, you have never met a "real oil professional" in your life. Pretty much every successful CEO I know in the business (and there are many) have zero time for idiots.

ARAMCO changes their business plan again---now they will buy a controlling stake and take over SABIC and merge it with their own operation


a bit premature. the article states firstly that the idea Aramco is targeting a controlling interest is from "Saudi sources" who, as usual, are unnamed much as every article that wants to claim something nefarious is happening somewhere.
and the author tempers his claims with:
Whether these latest reports are reliable is yet to be seen

which means there has been no statement by ARAMCO, SABIC or the Saudi government in this regard.

The author of the article is pretty much all over the place with his logic. First he suggests that the SABIC entity would be taken over by ARAMCO and merged into their business, then he suggests that the SABIC downstream piece would be offered up as its own IPO and then he goes onto say "
SABIC will likely be strengthened by the move, gaining access to Aramco's oil production and technical assistance.


so which is it....if as you claim there is a wholesale change of control through outright purchase of SABIC it would be merged into the downstream business of ARAMCO which is already significant. . That means SABIC isn't strengthened by the merger given it no longer exists as an entity. SABIC would be strengthened by sale of a non-controlling portion to ARAMCO given it suddenly would have free cash to do other things which might include dividending all of that cash out to its shareholders, the gov't of SA being the main benefactor. If as the author suggests ARAMCO would offer out the SABIC interests as a single downstream IPO then SABIC is indeed not strengthend by access to ARAMCO reserves, given they would be in the exact same position as previously. Plus the logic of buying a public company, merging it into a private company only to turn around and spin the assets out again as a public company defies all logic.

ARAMCO might choose to split off the upstream and downstream sectors into two IPO's (they talked about this possibility more than 2 years ago) but it is clear they have done all the work with regards to the upstream listing requirements (reserve audits, financial audits and valuation) and trying to maintain both a private and public ARAMCO entity makes little sense in terms of efficiencies that would normally be gained through a merger (need less staff and less overhead).

the fallacy that
The SABIC acquisition will for sure put some pressure on Aramco’s financial position, but with higher oil revenues and still very low interest rates globally, the pain will be minimal. At the same time, Aramco’s valuation will go up based on SABIC assets and the global market position.

is hard to understand coming from someone like the author who does financial analysis as an occupation. As I said previously the valuation of SABIC is paid for out of cash by ARAMCO. If the IPO valuation was updated the day after the SABIC purchase/merger it would have the same value (more or less) than prior to the purchase/merger....the money leaving ARAMCO in exchange for the value added by SABIC. There isn't a free lunch here.

Now if instead, the author thought about the possibility that ARAMCO was seeking to speed up the public listing of ARAMCO by instead purchasing SABIC (which is already public and listed) and then doing a RTO (reverse takeover) which would see ARAMCO/SABIC merger as a listed entity then that is something that does make some sense. By doing this ARAMCO shortcuts much of the hurdles associated with IPO's and all that would remain is for them to do what is required to achieve dual listing on other exchanges. This would still require some work but much of it is already done. By doing it this way the SA gov't gets the cash from the sale of SABIC (or possibly a mix of cash and shares in the new entity) and ARAMCO gets listed and ARAMCO increases it's downstream sector which has been part of it's business plan for sometime.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Tue 24 Jul 2018, 11:51:05

rockdoc123 wrote: the IPO valuation...


Reality check. There is no IPO. Its not even scheduled.

Please let us know when it happens, but don't hold your breath while you wait. Its going to be a long long wait---if it happens at all.

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 24 Jul 2018, 13:56:23

Reality check. There is no IPO. Its not even scheduled.


an IPO isn't "scheduled" until it is actually kicked off through the appropriate submission of all documents and filings to the exchange where the IPO would happen. That won't happen until weeks to a couple of months before the actual IPO or listing. IN the meanwhile the "plans" to complete an IPO require massive amounts of work for someone like ARAMCO given they have been private and not until recently had their reserves or books audited. That is why they have been talking about moving towards an IPO. All along they have said it would be nice to have in 2018 and now they are saying nice to have in 2019. That is understandable given the commodity price has been rising and hasn't stabilized as yet.

So by definition of "scheduled" there has never been an IPO, just like there was never an IPO for many companies during the period they were preparing for it.

But that does not mean ARAMCO has decided to stop the IPO process as you have claimed earlier on. In the most recent interview with Amin Nasser the CEO of ARAMCO he said they were still proceeding with all the requirements leading up to an IPO but the actual timing of that listing being a decision that the gov't would make as sole shareholder.

And to clarify some of the information regarding SABIC. In regards to that recent interview with Nasser:

On Thursday, Aramco said it was in “very early-stage discussions” with the kingdom’s Public Investment Fund (PIF) to acquire the SABIC stake in a private transaction, and had no plans to acquire any publicly held shares.


https://www.oilandgas360.com/saudi-aramco-ipo-timeline-shifted-by-sabic-acquisition/

so what does that mean? It means that there is no merger or takeover planned. SABIC would remain a public company listed on the Riyadh exchange. The only difference would be ARAMCO would buy all or the majority of the 70% shares in SABIC that the PIF currently holds. SABIC does not become part of ARAMCO...all that happens is ARAMCO becomes majority shareholder. For valuation purposes it is exactly as I stated above. ARAMCO would have to pay the gov't of SA the market value (or an uplift) for the 50 - 70% shares they might purchase. That value would become an asset on the ARAMCO books but it would be offset by the money they had to pay for that asset whether that be in their own working capital or through some form of debt obtained from investment banks (in which case the valuation would deal with the value of the debt incurred). ARAMCO may get value from preferential deals they can make with a company they own shares in and SABIC in turn could see some value in this arrangement as well. ARAMCO might also be able to direct expansion of SABIC into downstream areas ARAMCO is currently chasing.

The only reason this would stall an IPO is that it would require ARAMCO to deal with a bunch of separate issues with regards to share purchases and raising cash (distraction from what is still required to complete the work needed for an IPO) and the valuation would have to be rejigged to consider the cash out /asset value in issue.

When an IPO happens is almost certainly more to do with timing around commodity price than anything else....that is still what drives the valuation of ARAMCO and the amount of capital that the government would have (a trade off between capital from the IPO versus revenues from taxes and royalties). If they decide at some point not to do an IPO (which they haven't yet) it will because they don't need the cash for all of their diversification plans, not because they are worried about disclosure (given they have already opened up their collective kimonas through the reserve audits and financial audits).
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Tue 24 Jul 2018, 16:34:03

rockdoc123 wrote:
Reality check. There is no IPO. Its not even scheduled.


an IPO isn't "scheduled" until it is actually kicked off through the appropriate submission of all documents and filings to the exchange where the IPO would happen.


Yup. Thats what I said. That hasn't happened yet. In fact, ARAMCO hasn't even decided which exchange the supposed IPO will supposedly happen in supposedly someday, so they don't even know where to submit the documents. Decision, decisions, decisions.

Oh well....in the mean time ARAMCO is going to be very busy taking over SABIC, so the IPO will just have to wait for another year or so and maybe then ARAMCO will get around to it. Maybe.

Get it now?

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