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How to trade Saudi Aramco’s IPO

As soon as Saudi Aramco lists its shares through an initial public offering, Saudi Aramco stocks will become available for trading with Capital.com. You can trade Saudi Aramco shares through contracts for difference (CFD) and speculate on Saudi Aramco’s value without the need to own the asset itself.

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Aramco IPO date: When will Saudi Aramco go public?

On August 12 2019, during the company’s first-ever conference call, Saudi Aramco’s CFO told investors that the company is ready to go public, but that ultimately, the timing is up to the current owner; the Kingdom of Saudi Arabia.

CNBC sources have suggested that the stock will be issued in 2020, encouraged by the success of the company’s $12 billion debt offering. However Saudi Aramco will wait for favourable market conditions. With oil price volatility and the recent attacks on Aramco’s facilities, the IPO could be rearranged yet again.

So, when is the Saudi Aramco IPO? No one knows for certain, but it is likely to occur next year, if not sooner.

Saudi Aramco IPO valuation

In 2016, Crown Prince Mohammad bin Salman of Saudi Arabia, claimed that the company would be worth at least $2 trillion, and perhaps as much as $2.5 trillion. However, Bloomberg reported two years later that investors did not agree with this valuation. The Crown Prince had to push the IPO back and to climb down somewhat from his hubristic estimate.

A year on, the two trillion dollar IPO does not seem so unachievable. Saudi Aramco announced profits for the first half of the year at $46.9 billion, down from the $53.2 billion made during the first half of 2018. This profit, however, is well ahead of the cumulative total of the world’s six biggest listed oil companies.

Crown Prince Mohammad bin Salman is still pushing for the $2 trillion valuation, but reportedly this is about $500 billion over the estimates of the major banks. He expects to offer up to 5% of the company, in order to raise around $100 billion. If this were to happen it would set the record for the largest IPO to date.

Why is Saudi Aramco going public?

Typically, the majority of companies go public with the aim of raising capital. Meanwhile Saudi Aramco seems to be in a rather sound financial situation, reporting revenues of over $355.9 billion last year, as it produced 10.3 million barrels per day of crude oil. The half-year report for 2019 revealed revenue of $163.88 billion.

So, why does the Saudi Arabian national petroleum and natural gas mammoth want to go public? The IPO is the jewel in the crown of the Crown Prince’s ‘Saudi Vision 2030’. He announced in 2016, his plan for Saudi Arabia to reduce its dependence on oil. With steep fluctuations in oil prices and growth in non-traditional sources of energy, the “shale revolution” in particular, the Saudi-led oil cartel OPEC recognises that it has less influence on market prices and is slowly losing its market share.

An extended and concerted attempt at economic diversification is seen by many Saudi Arabia as essential to guaranteeing its future prosperity and influence. The Kingdom announced that it hopes to develop its tourism and service sector in the next decade while also improving public services such as health and education.

Part of this plan will be opening up Saudi Aramco to investors from both home and abroad, with indications that the fund raised through foreign investment will then be used to aid in the country’s diversification.

Who owns Saudi Aramco?

Saudi Aramco is completely state-owned by the Saudi government; and therefore run by the Crown Prince with the help of CEO Amin Nasser.

What is Saudi Aramco?

Originally, Saudi Aramco was an American company founded by Standard Oil of California. Known as the California-Arabian Standard Oil Company, it secured an oil concession agreement from the King of Saudi Arabia in 1933. Five years later, the company discovered oil on the eastern coast of Saudi Arabia.
In 1948, it was renamed to the Arabian American Oil Company, or Aramco. Back then, the business was co-owned by Standard Oil of California, Standard Oil of New York, Standard Oil of New Jersey and Texaco.
Starting from 1972, the Saudi government gained increasing shareholding stakes in the American-owned company. In 1988, it took full control of the business and rebranded from Aramco to Saudi Aramco, the Saudi Arabian Oil Company.
Today, Saudi Aramco is a petroleum and natural gas company that is completely state-owned by the Saudi government. Based in Dhahran, its operations cover the globe and include exploration, production, petrochemicals, refining, marketing and international shipping.


Saudi Aramco’s board of directors

Yasir Othman Al-Rumayyan

Dr. Ibrahim A. Al-Assaf

Mohammed A. Al-Jadaan

Nabeel Mohamed Al-Amudi

Mohammad M. Al-Tuwaijri

Mark Moody-Stuart

Andrew N. Liveris

Andrew F.J. Gould

Lynn Laverty Elsenhans

Peter L. Cella

Amin H. Nasser

Saudi Aramco’s management team

Amin H. Nasser

President and chief executive officer

Nabeel A. Al Mansour

Senior VP general counsel and corporate secretary

Mohammed Y. Al Qahtani

Senior VP upstream

Abdulaziz M. Al-Judaimi

Senior VP downstream

Ahmad A. Al-Sa’adi

Senior VP technical services

Muhammad M. Al-Saggaf

Senior VP operations and business services

Khalid H Al-Dabbagh

Senior VP finance, strategy and development

Amin H. Nasser

President and chief executive officer

Nabeel A. Al Mansour

Senior VP general counsel and corporate secretary

Mohammed Y. Al Qahtani

Senior VP upstream

Abdulaziz M. Al-Judaimi

Senior VP downstream

Ahmad A. Al-Sa’adi

Senior VP technical services

Muhammad M. Al-Saggaf

Senior VP operations and business services

Khalid H Al-Dabbagh

Senior VP finance, strategy and development

According to accounts seen by Bloomberg News, Saudi Aramco is the most profitable business in the world. The company boasts both the second-largest proven crude oil reserves and second-largest daily oil production globally. It reportedly produces one out of every eight barrels of oil worldwide, or about 12% of global production. In addition, Saudi Aramco operates the largest single hydrocarbon network in the world.

Last year, about three-quarters of Aramco’s crude exports – around 5.2 million barrels per day – were delivered to its customers in Asia, including China, South Korea, Japan, Taiwan and India. Its crude deliveries to North America hit over 1 million barrels per day and to Europe – 864,000 barrels per day.

The business continuously expands its global presence. For instance, in April 2019, Saudi Aramco signed a deal to acquire a 13% stake in Hyundai Oilbank, a South Korean oil refiner, for $1.24 billion. Moreover, at the same time, the company signed a long-term agreement with PKN Orlen, Poland’s leading oil refiner, to supply it with Arabian Crude Oil.


Saudi Aramco’s global offices



On September 14, 2019, there were drone attacks on two Saudi Aramco facilities: the Khurais oilfield and the Abqaiq oil processing facility. The Iran-aligned rebel army in Yemen, known as the Houthis, claimed responsibility for the attack, which reduced Saudi oil output by 5.7 million barrels per day, comprising over 5% of the world's supply.

There were discussions by the country’s officials and Aramco’s executives on postponing Aramco's IPO, as the attacks "sidelined more than half of the kingdom's output" of oil. However, shortly after the strike the Saudi Energy Minister, Prince Abdulaziz bin Salman, told a press conference: "Production will be back to normal by the end of September," adding that Aramco had emerged "like a phoenix from the ashes" after the incident. He also stated that plans for the stock market listing of Aramco would continue "as is".

On September 18, 2019, Saudi Aramco completed the acquisition of Shell Saudi Arabia Limited’s 50% interest in the SASREF joint refining venture in Jubail Industrial City for $631 million.

Saudi Aramco Fast Facts

1One of the world’s largest companies by revenue
2It is the most profitable company in the world
3Completely state-owned
4World’s second-largest proven crude oil reserves

What is an IPO?

An initial public offering is the process by which a company lists its shares for public trading. The company decides how many shares it is going to offer, and an investment bank typically estimates the initial price of the stocks based on supply and demand. After the company’s shares are listed on the stock exchange under a particular ticker symbol, these shares can be publicly traded.