Saudi Aramco IPO prospectus ‘virtually ready,’ with new reserves valuation likely to top 260bn barrels

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Saudi Aramco Chief Executive Amin Nasser said: ‘There is a lot of demand for the listing of Saudi Aramco which we will see when we go on our roadshow.’ (Reuters)
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The Saudi Aramco facility in Dammam city. A reserves estimate materially higher than 260 billion barrels would have important implications for the company’s valuation in an IPO. (AFP)
Updated 27 March 2018
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Saudi Aramco IPO prospectus ‘virtually ready,’ with new reserves valuation likely to top 260bn barrels

NEW YORK: The prospectus for the initial public offering (IPO) of Saudi Aramco is “virtually ready,” including a revised valuation of the oil giant’s reserves, sources close to the company’s plans told Arab News.

The news came as Saudi Arabia’s Crown Prince Mohammed bin Salman said OPEC is seeking to cooperate with Russia on oil supplies for the next 10-to-20 years. The crown prince, currently leading a Saudi delegation in the US, added that OPEC has agreed on the general outlines for long-term oil supply cooperation with Russia.

Sources close to Aramco in New York, who declined to be identified because details of the prospectus were not in the public domain, said the plans for an IPO were on track for later this year, and that the prospectus was awaiting government approval and some finalizing of details, like valuation and listing venue. “There are a few spaces left blank but (the prospectus) is almost ready to go,” a source said.

News that the reserves valuation is complete will be a significant boost for the IPO planning process. Some stock exchanges impose tight restrictions on reserves estimates by oil companies. The Aramco valuation has been completed on the basis of a sample of Aramco’s oil fields in the Kingdom by DeGolyer and MacNaughton, a petroleum consulting firm based in Dallas, Texas.

Aramco’s publicly stated reserves have for a long time been reported by the company at a level of around 260 billion barrels, but the person said that DeGolyer’s new assessment could show a “significant” increase from that level. A reserves estimate materially higher than 260 billion barrels would have important implications for the company’s valuation in an IPO.

There have been reports in some outlets that Aramco’s advisers were struggling to meet the valuation of $2 trillion put on the company when the IPO was announced two years ago, and that investors were less than enthusiastic about what would be the biggest IPO in history.

Chief Executive Amin Nasser used an television interview in the city to confirm that the IPO was still on track for the second half of 2018, and sought to counter suggestions that American investors were “cool” on the potential listing.

“I think there is a lot of investor appetite. There is a lot of demand for the listing of Saudi Aramco which we will see when we go on our roadshow. Preparations have never stopped. We always said we’d be ready as a company for a listing in the second half of 2018,” Nasser told Bloomberg TV.

He added that the venue and timing of the IPO were decisions that would be made by the government of Saudi Arabia.

He indicated that an IPO with an international element was still in the company’s plans. “There are a lot of venues to list in other than the Kingdom, for sure,” he said.

Sources close to the plans said however that the deadline for a listing on a New York stock market was pressing, and if Aramco did not announce its plans soon it could be too late to float shares on a US exchange this year. A listing in London, where the regulations are lighter, would still be possible.

However, a two-stage IPO — first on the Riyadh stock exchange, the Tadawul, with a commitment to New York or London later — was still an option under consideration, the person said.

Aramco has been gauging investor sentiment in a series of meetings this year with investing institutions. A major topic of interest is the level dividend Aramco will pay investors when it is listed.

Nasser told Bloomberg that Aramco was considering a dividend comparable with the 6 percent yield that some big independent oil companies pay investors. “We will be competing with the best for sure,” he said. Potential investors would be informed of dividend plans on the roadshow, he added.


Gulf stocks extend losses on tanker attacks

Updated 17 June 2019
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Gulf stocks extend losses on tanker attacks

  • Cautious mood among investors as fears of military confrontation rise

DUBAI: Stock markets in the Gulf extended losses on Sunday reflecting a cautious mood among investors following last week’s oil tanker attacks. 

The attacks on the tankers in the Gulf of Oman on Thursday raised fears of a military confrontation in a vital shipping route for global oil supply and heightened tensions between Iran and the US, which have been in a standoff over Iran’s nuclear program. 

The Saudi index had dropped 1.6 percent on Thursday and fell a further 0.6 percent on Sunday after slight gains in early trade. Most Saudi banks were down, despite Sunday’s announcement by Saudi British Bank that its merger with Alawwal Bank was completed. 

HIGHLIGHTS

• Gulf stocks reverse early gains.

• Gulf of Oman tanker attacks dampen investor mood.

• Saudi banks mostly down despite SABB-Alawwal merger.

The two banks have combined to create the country’s third largest lender, becoming a single listed company after regulatory approvals. SABB’s shares shed 0.1 percent. Alinma Bank, however, gained 0.4 percent, and was one of the stocks registering the highest trading volume on Sunday. 

In the UAE, the Dubai and Abu Dhabi indexes fell 0.7 percent and 0.2 percent, respectively. The Dubai market had risen earlier in the day, boosted by DAMAC Properties and Union Properties, which closed up 2.2 percent and 0.5 percent, respectively. But heavyweight Emaar Properties, the largest developer in the emirate, fell 2.5 percent, weighing on the index. 

Dubai’s telecom operator Du (Emirates Integrated Telecommunications Co) shed 0.4 percent, reversing earlier gains, after it said the UAE sovereign wealth fund Emirates Investment Authority had increased its stake by buying 463.3 million shares from Mamoura Diversified Global Holding and General Investments. 

In Abu Dhabi, blue chip companies Aldar Properties, First Abu Dhabi Bank and Abu Dhabi National Oil Company for Distribution, led losses, dragging down the main index. The other Gulf markets were all in the red, except for the Bahrain index, which rose slightly. 

In Egypt, the index gained 0.2 percent, boosted by a 4.5 percent gain by Pioneers Holding Company for Financial Investments. The company said one of its divisions, Arab Dairy Products, had received a letter of intent from a Netherlands based company about a plan to buy it.