ANALYSIS – It may be the worst time for an oil and gas company to seek a public listing, but the world’s largest oil producer is contemplating just such a move.
Saudi Arabian Oil Co., or Saudi Aramco, confirmed Friday it’s studying “various options” to list “an appropriate percentage” of the company’s share on the market or list a bundle of its downstream subsidiaries.
The news, initially revealed by the powerful deputy crown prince Mohammad Bin Salman Al-Saud, comes at a curious time, as crude oil prices have fallen 45 per cent over the past 12 months and some analysts are not ruling out a drop to the mid-US$20s per barrel as early as February.
Despite the poor fundamentals, long-term oil bulls may not be able to ignore the prospect of a stake in a behemoth responsible for a daily output of 10 million barrels — or one out of every eight barrels produced in the world.
Aramco’s crude oil reserves of 261 billion barrels are more than 10 times that of Exxon Mobil Corp., the world’s largest publicly listed oil company. A quick, back-of-the-envelope calculation suggests Aramco may be worth 10 times more than Exxon’s US$314 billion valuation.
But unlike publicly listed Big Oil, Aramco comes with a lot of extra baggage, to which investors would be wise to pay close attention.
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