With officials calling Saudi deputy crown prince bin Salman’s $2 trillion estimate of Saudi Aramco valuation as “unrealistic and mind blowing,” OilPrice.com’s Cyril Widdershoven notes the primary discussion taking place is the overall level of transparency offered by Aramco’s leadership, which is supported by the Saudi government.
Saudi Aramco’s IPO, slated to raise between $100 billion and $400 billion from a 5 percent stake in the company, will continue to make headlines until its launch. Lately, discussions on the valuation of Aramco have been intense, and the jury is still out regarding an exact price. Aramco’s IPO will be a game-changer, propelling the world’s largest National Oil Company (NOC) into a league of its own on the financial markets. The current market capitalization estimates of $1-2 trillion are based on valuations of Aramco’s hydrocarbon reserves carried out by independent consultants. These estimates put the giant oil company far ahead of any other publicly owned company. Two major questions remain to be answered however, one of which has been largely ignored by the mainstream media.
The primary discussion taking place is the overall level of transparency offered by Aramco’s leadership, which is supported by the Saudi government. After several days of attending the GCC Petroleum Media Forum (GCCPMF) in Abu Dhabi, attended by all GCC ministers of oil, including Saudi minister Khalid Al Falih, and a long list of government advisors, the issue of transparency has yet to be solved. Gulf oil ministers and CEOs still hold a very conservative idea about financial and operational transparency. There have been minor attempts by Aramco, ADNOC, and QP to open more data and insights to the financial world and media, but the world’s largest oil company remains far from transparent. When asked about the Aramco IPO and Saudi Vision 2030, the respective Saudi officials, including Khalid Al Falih, only produced basic media statements, already largely published in the Arab and global media outlets. Even the fact that the Forum was also meant to present a new OPEC-Abu Dhabi based data outlet, no real new information on reserves, production figures, or investment cycles were presented. Analysts still need to rely on figures presented by the existing outlets, OPEC-IEA-EIA-EIF.
This post was published at Zero Hedge on Apr 25, 2017.