As investors eagerly await the proposed Saudi Aramco IPO several key questions have still not been answered about what is slated to be the largest IPO ever.

While Saudi Aramco is indisputably one of the largest and wealthiest oil companies in the world, the firm’s potential market capitalization value is still unclear.

Saudi Arabian Deputy Crown Prince Mohammed bin Salman said earlier this year that Saudi Aramco is worth about $2 trillion.

Saudi Aramco does not currently provide earnings and revenue information to the public so estimates about how much the IPO will be worth remain sketchy.

The size of the IPO is perhaps the most pressing question that has yet to be answered.

Saudi Aramco officials have made it clear that any offering would see the kingdom’s government hold onto a majority stake.

Prince Mohammed said in an interview earlier this year that the company may offer less than 5 percent stake through an IPO.

“If 1 percent of Aramco is offered to the market, just 1 percent, it will be the biggest IPO on earth,” Prince Mohammed said in an interview seen by Reuters.

To date, the company has only said it would list an “appropriate percentage of the company’s shares and/or the listing of a bundle its downstream subsidiaries.”

Outside of that statement little has been disclosed on how large of a stake the state-owned oil giant is willing to offer investors.

Saudi Aramco has also been mum about the assets that would be included in the IPO.

The state-owned company said earlier this year that it has begun studying “various options to allow broad public participation in its equity” in either the company as a whole or a bundle of its downstream subsidiaries.

Saudi Aramco is known as an upstream powerhouse, producing an average of 10.2 million barrels of crude per day in 2015, an all time high for the company despite low prices.

The state-owned company’s downstream operations also boast some impressive figures.

Saudi Aramco has reported 1 million bpd of wholly owned domestic refining capacity, 1.9 million bpd of capacity from domestic joint ventures, 2.5 million bpd of capacity from international joint ventures and 5.4 million bpd of worldwide capacity.

The company’s total share of worldwide refining capacity is currently about 3.1 million bpd.

Those figures rival the 5.11 million bpd of global refinery capacity levels from ExxonMobil, currently the largest energy firm in the world on a market capitalization basis.

However, until Saudi Aramco settles on the assets that will be tied to the IPO, investors can only speculate on growth and earning potential.

Finally, one last but important question about the IPO remains: when will the sale take place?

Saudi Aramco announced in January that it was beginning to study a potential IPO but the company has yet to disclose a timeline for the offer.

The company said that it will study various options and present those findings to the its board of directors who will then make recommendations to the Saudi Aramco Supreme Council.

No government or company officials have yet to even hint at a potential sale date.

While Saudi Aramco has boosted production despite low oil prices, it’s still unclear if the company will wait and see if oil prices move out of the $40 per barrel zone before picking a date.

No matter what the final details of a Saudi Aramco IPO are one thing is clear: it has the potential to a billion dollar fee bonanza for investment firms.


Leave a Reply