Saudi Arabia approves the initial public offering of its state-run oil company Saudi Aramco
A sign of Saudi Aramco's initial public offering is seen during a news conference by the state oil company at the Plaza Conference Centre in Dhahran, Saudi Arabia November 3, 2019.
Analysts say the kingdom likely hopes local investors will push its share prices toward a desired $2 trillion valuation and buoy that price ahead of any possible further listing abroad. Saudi Aramco also made a point in its filings to highlight its profitability and low costs through newly released data once held as a state secret by the Al Saud royal family, euphemistically referred to by the company as its "current shareholder.
It's hard to overstate the power of the oil firm, known formally as the Saudi Arabian Oil Co. It produces over 10 million barrels of crude oil a day, some 10% of global demand. The firm's net income in 2018 was $111.1 billion, far beyond the combined net income of oil giants BP PLC, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell PLC and Total SA.
"I believe it is in the interest of the Saudi market, and it is in the interest of Aramco," Prince Mohammed told the Economist magazine in 2016 in announcing his plans. Based on that, Saudi Arabia may choose to rely on local investors to push up the price of the stock, Raja said. Saudi Aramco has sought to assure investors, given the questions over its valuation and the potential hazards of future attacks or geopolitical risk. A presentation posted to Aramco's website last month announced the intent to offer a $75 billion dividend for investors in 2020. That's the payment per share that a corporation distributes to its stockholders as their return on the money they have invested in its stock.
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