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Saudi Aramco Says IPO Priced at Top to Make it World's Biggest IPO

Saudi Aramco Says IPO Priced at Top to Make it World's Biggest IPO

Thursday, 5 December, 2019 - 19:30
An Aramco oil tank is seen at the Production facility at Saudi Aramco's Shaybah oilfield in the Empty Quarter, Saudi Arabia May 22, 2018. (Reuters)

State-owned oil giant Saudi Aramco has priced its initial public offering (IPO) at the top of its indicative range, the company said on Thursday, making it the world’s biggest flotation, above Alibaba’s $25 billion listing in 2014.


Aramco priced its IPO at 32 riyals, the top of its indicative range of 30-32 riyals per share, it said in a statement, which means a deal size of $25.6 billion.


The offering generated subscriptions of $106 billion by institutional investors and together with the total demand from individual Investors, order book hit $119 billion, it said.


Aramco is the world’s largest oil producer, pumping 10% of the world’s supply, and the most profitable company with its half-year net profit rising 12% to $46.9billion.


Last year, Aramco made an annual net profit of $111 billion, over a third bigger than the combined net income of the five “super majors” Exxon Mobil, Shell, BP, Chevron and Total.


Aramco had 260.2 billion barrels of oil equivalent in 2017, larger than the combined reserves of Exxon Mobil, Chevron, Shell, BP and Total. The reserves have an estimated life of 54 years.


The company produced 10.3 million barrels per day (bpd) of crude last year, touting the lowest production cost in the world, at $2.80 a barrel, according to company documents. It also produced 1.1 million barrels of natural gas liquids and 8.9billion standard cubic feet per day of natural gas.


Almost three-quarters of Aramco’s crude exports, about 5.2million bpd, were delivered to customers in Asia last year, where it believes demand will grow faster than elsewhere in the world. Its Asian buyers include China, India, South Korea, Japan and Taiwan. Its crude deliveries to North America reached more than 1 million bpd last year; to Europe, 864,000 bpd.


To diversify its oil business, Aramco is expanding in refining and petrochemicals with the aim of almost tripling its chemicals production to 34 million tons per year by 2030 and raising its global refining capacity to 8-10 million bpd from more than 5 million bpd.


The company produces, refines and exports oil from Saudi Arabia, but also has refining operations across the globe. Aramco’s US oil refining subsidiary Motiva Enterprises owns the 607,000 bpd Port Arthur refinery in Texas, the largest in the United States. In 2017 the company announced plans for $18 billion in investments in its operations in the Americas over five years.


Aramco is also expanding its oil refining and downstream capacity, particularly in rapidly growing countries such as China and India. Aramco had a net refining capacity of 3.1million barrels per day in 2018.


With 76,000 employees in 2018, Aramco has energy industry operations, research facilities and offices scattered across the globe, in Asia, Europe and the Americas. It has country offices in Beijing, New Delhi, Singapore, New York, London, Houston and elsewhere.


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