Page 4 - MEOG Week 06 2022

MEOG COMMENTARY MEOG

Aramco said to be

considering share sale

amid production push

Aramco is reported to be considering listing more shares as it seeks to leverage resurgent
oil prices to further strengthen its finances while ramping up oil production capabilities.

SAUDI ARABIA STATE-OWNED Saudi Aramco is reported to pandemic, has seen its finances buoyed as crude
be holding early talks about the potential listing prices edge towards $100 per barrel. The firm is
of more of the company’s shares, in a move seen expected to announce massively improved per-
WHAT: raising significantly more than the firm’s 2019 formance when it publishes its full-year 2021
The share sale could initial public offering (IPO). results in March.
raise up to $50bn for the Meanwhile, the Kingdom’s energy minister In late 2019, the Saudi government sold a
company, which could spoke candidly this week about plans to con- stake of 1.5% in Aramco in the IPO on TASI.
be leveraged to support tinue oil market domination as it also turns its This raised $25.6bn, making it the world’s larg-
the expansion of the attention to gas, hydrogen and renewable energy est every IPO, with a further 0.2% or so sold later
Kingdom’s sovereign production. that increased the return to $29.4bn. This was
wealth fund. duly transferred to the Public Investment Fund
More shares (PIF), which is the country’s main sovereign
WHY: Sources were quoted this week by various media wealth fund.
Aramco has monetised outlets, including Wall Street Journal, Bloomb- The fund currently has around $480bn of
pipeline assets erg and Dow Jones, as saying that Aramco is assets under management (AUM) and accord-
and appears to be working with advisers to establish a plan to float ing to PIF governor and Aramco chairman Yasir
unburdened by recent additional shares on Riyadh’s Tadawul All Share Al-Rumayyan, this is predicted to increase to
concerns about dividend Index (TASI) stock exchange and a potential sec- SAR4 trillion ($1.07 trillion) by 2025 and SAR7.5
payments as it doubles ondary listing in London, Singapore or another trillion ($2 trillion) by the end of the decade.
down on oil capacity international exchange. Prior to the 2019 IPO, Aramco had planned a
expansion. While the discussions remain in a prelim- listing of up to 5% on either the London, Tokyo
inary stage, one source told Dow Jones that or New York stock exchanges, but with concerns
WHAT NEXT: around 2.5% of the company’s shares could be about a lack of investor appetite as well as poten-
The company looks set sold. With Aramco currently valued at around tial legal issues relating to the involvement of
to surpass its previous $1.97 trillion, this could raise almost $50bn. Saudis in the 9/11 attacks in the US these ambi-
target of 13mn bpd by The move comes as the company, which in tions were pegged back.
2027. Q2 2020 slashed its capital expenditure budget In February 2021, Crown Prince Mohammed
for the year by around $12bn in response to fall- bin Salman (MbS) said at the Future Investment
ing oil prices and the coronavirus (COVID-19) Initiative conference that more Aramco shares

P4 www. NEWSBASE .com Week 06 09•February•2022