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Saudi Aramco IPO

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Re: Saudi Aramco IPO

Unread postby Cog » Fri 02 Nov 2018, 17:31:17

pstarr wrote:What idiot would purchase shares in collapsing company?


Tesla ring a bell?
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 02 Nov 2018, 19:56:06

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%


If you read through the entire press piece the underlying problem is identified. Nothing to do with reserves but all to do with the assumptions WoodMac has made regarding the contractor share (in this case Aramco).

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.


There has been a number of releases from the Saudi government indicating that they have changed both the royalty and tax structure as applies to Aramco. The income tax assessed to Aramco will drop to 50% and the royalty will be on a sliding scale based on production. The comment from other observers is that the royalty tax scheme for Aramco is comparable to many less oil-endowed countries in the world. At say 30% contractor take Aramco is in a pretty good spot. Lets assume they produce 10 MMB/d and see a $40 netback per bbl. Thats over a $140 billion in free cash flow a year much better than they are doing now. Regardless of what sort of discount factor you use 261 billion barrels is worth a lot more than $400 MM.
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Fri 02 Nov 2018, 23:24:19

Cog wrote:
pstarr wrote:What idiot would purchase shares in collapsing company?


Tesla ring a bell?

I have no horse in the Tesla race, but it seems to me that with Tesla now showing profits (or at least certainly NOT showing massive losses any more), that to claim Tesla is "collapsing" isn't at all credible. (Though many of the shorts, with a clear axe to grind, and having been proven wrong MANY times in their claims the past several years, would agree with ANYTHING negative someone has to say about Tesla. Imagine that.)

BTW, I think Musk is basically a jerk (a genius, but a jerk) -- but that doesn't mean Tesla is imploding.

Disclosure: I remain neutral on Tesla overall, which I have been consistently for years. I remain bullish on the EV industry overall, over time, as I have been consistently for years, as the technology is clearly maturing. (To me, EV means all forms of EV's, including HEV, PHEV, and BEV. I think the BEV purists claiming anything but a BEV is horrible are making the imperfect the enemy of the good -- which, IMO, is clearly a stupid bias.)
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 Plantagenet » Mon 19 Nov 2018, 12:08:52

WSJ reports today that Saudi Aramco is abandoning the idea of issuing bonds to pay for the planned purchase of SABIC because, once again, they are unwilling to do the disclosures concerning Aramco's financial state and oil reserves that would be required in order for Saudi Aramco to issue bonds on the open market.

This is the exact same concern that helped torpedo the IPO----.

aramco-abandons-plan-for-massive-corporate-bond-sales-to-fund-sabic-deal

Now Saudi Aramco is stalled on the IPO, and has cancelled the bond sale, but they still want to raise a pot of money for Prince Muhammad. But according to the WSJ, there is also a new concern that Prince Muhammad's nasty habit of imprisoning and torturing and murdering his critics, as demonstrated in the Kashoggi case and other cases, might cause people to hesitate before buying bonds or anything else that he is involved with.

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 19 Nov 2018, 16:47:56

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.


first of all the definition of peak is the point of maximum production...it does not speak directly to reserves.

Image

no evidence of peak production as yet.

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


and what non-disclosure. Given they haven't executed the IPO as yet nor have issued corporate bonds there is no requirement for them to officially disclose. That being said they have had their reserves audited by D&M and GCA. These companies have stated that they found the Aramco estimates to be accurate.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 20 Nov 2018, 11:16:52

Would YOU (anyone ?) invest money in a venture where the main reason for that investment,the asset that generates profit, is not disclosed ?


maybe you should read something other than zerohedge. There has 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.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Tue 20 Nov 2018, 12:36:21

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.

Crown Prince Muhammad wants ca. 70 billion dollars to fund his plan for modernization of KSA. The current plan is for the royal family to sell their holdings in SABIC to Aramco for ca. 70 billion......and then Crown Prince Muhammad will have his money.

But just the like IPO, the original SABIC plan has been derailed----Aramco just cancelled their plan to issue ca. 70 billion in bonds and then turn the cash over to Crown Prince Muhammad. No doubt they'll come up with some other plan to get the money, but for now Crown Prince Muhammad is busy dealing with internal and international revulsion over his ill advised schemes, including the recent torture and murder of US Citizen Kashoogi.

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 20 Nov 2018, 14:28:43

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.


Not according to Aramco or many others:

From Amin Nasser Aramco CEO

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.”


This from Faisal Mrza at Arab News

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.


According to a couple of reporters Aramco is now considering funding the SABIC deal via a leveraged buyout. They also mentioned Aramco sees the current market conditions as particularly bad timing to try to issue corporate bonds.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 20 Nov 2018, 17:14:37

"leveraged buyout" huh?

They really are broke :?


do you actually understand what it is or how it works? Apparently not with a comment like that.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Tue 20 Nov 2018, 17:29:21

Saudi Aramco couldn't get the IPO done so they delayed the IPO and shifted to buying SABIC.

Now they can't get bonds issued to buy SABIC, so they are delaying the SABIC purchase which is delaying the IPO still further.

On top of that Prince Muhammad has shown he is a murderous thug...definitely not the ideal person to be doing business with.

For three years now we've seen failure after failure on multiple plans to advance the IPO. Now we've got another ooopsies! and another change of plan from ARAMCO. Its enough to make a rational person skeptical about the whole IPO deal

saudi-aramco-sabic-deal-more-fodder-for-ipo-skepticism

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Wed 09 Jan 2019, 21:45:27

https://www.cnbc.com/2019/01/09/saudi-arabias-massive-oil-reserves-grow-by-2point2-billion-barrels.html

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.
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Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Thu 10 Jan 2019, 00:44:30

rockdoc123 wrote:https://www.cnbc.com/2019/01/09/saudi-arabias-massive-oil-reserves-grow-by-2point2-billion-barrels.html

Saudi Arabia's massive oil and gas reserves are even bigger than previously reported, according to an outside assessment commissioned by the kingdom.

But none of it can be affordably lifted according to the ETPers.

But it's all a lie and the KSA will run out "real soon now" according to quite a few peakers.

But but but anyone who claims resources are increasing is just a corny and completely delusional according to various fast crash doomers.

Those annoying measurements that don't conform to rapid doom. It MUST all be a conspiracy (or several). :roll:
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 » Thu 10 Jan 2019, 08:30:12

What interests me is that the Reserves noted by D&M will likely be Proven Reserves as that is what gets normally reported. I wonder what is left of Probable and Possible Reserves. My guess is after all the mega projects most of the Possible have been converted so it should be largely only Probable left. At one time SA was reporting fairly large 2P but a lot of that will have been converted to P1 by now. Maybe there is some left, maybe not. Time will tell. But at least the D&M statement gets past the "Saudis are lying about their reserves" mantra that Pstarr and others have been spewing for the last decade or so.
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Re: Saudi Aramco IPO

Unread postby Cog » Thu 10 Jan 2019, 09:36:44

If those are proven and economically recoverable reserves, then at current rates of production, then SA has oil for the next 80 years.
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Re: Saudi Aramco IPO

Unread postby StarvingLion » Fri 11 Jan 2019, 21:16:22

Aramco IPO means the End of Aramco and the runaway Saudi Welfare State.

Saudi cannot finance oil expansion because decline rates at NorthCentral Ghawar will increase massively long before the new infrastructure is in place.

They are can kicking awaiting Ghawarian 2022 decline increase ....a steel bolt to the temple.

And then its Venezuela time.
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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Sat 12 Jan 2019, 00:47:25

Saudi cannot finance oil expansion because decline rates at NorthCentral Ghawar will increase massively long before the new infrastructure is in place.


what new infrastructure, the mega projects were completed eight years ago, the infrastructure is all there and it is termed spare capacity now.
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Re: Saudi Aramco IPO

Unread postby Cog » Sat 12 Jan 2019, 04:55:23

We are all going to be dead and buried before SA runs out of oil at current rates of production.
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Sun 17 Feb 2019, 14:04:56

The Saudis have changed course again. Four years ago Prince Muhammad said Saudi Aramco shares would be sold in an IPO, and the money would be used to modernize Saudi Arabia and shift away from and to a "modern" economy.

Then the Saudis said the IPO would be delayed.

Then they said said the IPO would be delayed even longer while Saudi Aramco bought a chemical company.

Then they said the IPO wold be delayed even longer while Saudi Aramco issued bonds.

Now Prince Muhammad is keeping a low profile and Saudi Aramco just announced they are actually be EXPANDING its activity in the oil biz by going overseas and looking for new oil resources to buy and produce.

saudi-aramco-makes-existential-bet-oil

Image
Don't be surprised if Saudi Aramco buys some land and starts fracking in Texas.

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Re: Saudi Aramco IPO

Unread postby rockdoc123 » Sun 17 Feb 2019, 16:28:33

This from an interview with Amin Nasser, CEO and President of Saudi Aramco at the WEF in Davos a few weeks ago:

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.


http://www.arabnews.com/node/1442461/business-economy
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Re: Saudi Aramco IPO

Unread postby Plantagenet » Sun 17 Feb 2019, 19:25:56

... 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


Exactly right. Thats exactly what I've been trying to explain to you for several years now.

In spite of your repeated insistence the IPO would happen in 2016, and then more of your posts and more insistence on the IPO happening in 2017, and then another barrage of your inaccurate posts insisting it would happen in 2018, in the real world the IPO hasn't happened yet. It has been postponed and delayed for years now.

“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.


Yes, of course, there is no doubt. Yes, if the government decides it can be done in no time.

Unless....and this is a big caveat.....unless another alternative strategic play comes into view again, necessitating another delay.

Then the IPO wil likely be postponed......again.

And what was it that KSA and Saudi Aramco said just a couple of days ago....why look look in my post just above. What do you know---- they just announced they have developed a new alternative strategic plan. Yes, there has just been a significant change to KSA/Saudi Aramco business plan. Now they are talking about expanding Saudi Aramco to take on new oil plays and opportunities in areas OUTSIDE of KSA.

It makes one wonder.....if buying SABIC caused a delay in the IPO as Saudi Aramco digested the new acquisition and updated their books, will taking on new properties and new oil developments OUTSIDE of KSA also require another delay in the IPO as Saudi Aramco digests these latest acquisitions and updates their books again and again?

Time will tell.

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