Saudi Aramco Confirms IPO Consideration

Saudi Aramco has today confirmed that it is considering a public offering after The Economist published an interview yesterday with Muhammad bin Salman, Saudi Arabia’s deputy crown prince, who revealed that a decision regarding the future of Aramco will be taken in the next few months.

As ValueWalk reported yesterday, during his first on-the-record interview, Muhammad bin Salman said that the future of Aramco is, “being reviewed, and we believe a decision will be made over the next few months.” He went on to say that a public offering is “in the interest of the Saudi market, and it is in the interest of Aramco, and it is for the interest of more transparency, and to counter corruption, if any, that may be circling around Aramco.”

Saudi Aramco issued a statement today confirming that it was indeed considering its options, although the company stopped short of saying that it had decided on a concrete plan of action.

In today’s statement the company announced:

“Saudi Aramco confirms that it has been studying various options to allow broad public participation in its equity through the listing in the capital markets of an appropriate percentage of the Company’s shares and/or the listing of a bundle of its downstream subsidiaries.”

“Once the study of these various options is complete, the findings will be presented to the Company’s Board of Directors which will make its recommendations to the Saudi Aramco Supreme Council.”

Saudi Aramco: The most precious crown jewel

Saudi Aramco is undoubtedly the kingdom’s most valuable crown jewel. Estimates vary, as Aramco is notoriously secretive about its operations and financial position, but the company’s market capitalization could exceed $2 trillion, more than four times the size of all the other oil majors put together.

What’s more, the value of the company’s reserves could exceed $6 trillion, more than six times the size of all the other oil majors put together.

(click to enlarge)

According to the Wall Street Journal, Mohammad al-Sabban, a former senior adviser to the Saudi oil ministry believes that Aramco’s value is more than $10 trillion and even a small IPO will make Aramco more efficient and more cost effective through transparency. A more efficient and cost effective Aramco will only benefit the company’s public market valuation.