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RANT The Biggest Oil Company Offers Shares

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Nov 1, 2019
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I don’t know much about stocks; however, it does strike a question in my mind.

Specifically speaking of Saudi Arabia’s biggest oil company (Saudi Aramco) in which contributes to a big part of oil production, is soon going to offer shares of their business publicly. The business is estimated to be valued around $1.5 trillion.

That being said, here are my few questions and would be blessed to hear your thoughts:

1. Why would Saudi Aramco offer shares of their business to the public, including internationals?
2. What does this mean and why is this important to investors?
3. Is this an opportunity for investors to capitalize on? Why?
4. Is this opportunity open to investors with a large cash stack? Or is open to new investors as well?
5. Why is every news station raving about it?

Again, would love to hear your thoughts, I am 17 and would love to be exposed to different views or information. Thank you!
 

MHP368

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Im curious if this means theyll actually have to tell us how much is really left in ghawar.

IMO this is a late game strategy because as it stands the market can't support profitable prices per barrel as the EROI on existing firlds declines.

This gives them a buffer of cash to wether the (hopefully actually physically possible) weaning of industrial society off of crude.

My bet is they try to structure it somehow so that the real proven reserves don't become public knowledge though , wouldn't bode well for them or us if the estimates were say , 20 years out or sooner.
 

Bones81

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I don’t know much about stocks; however, it does strike a question in my mind.

Specifically speaking of Saudi Arabia’s biggest oil company (Saudi Aramco) in which contributes to a big part of oil production, is soon going to offer shares of their business publicly. The business is estimated to be valued around $1.5 trillion.

That being said, here are my few questions and would be blessed to hear your thoughts:

1. Why would Saudi Aramco offer shares of their business to the public, including internationals?
2. What does this mean and why is this important to investors?
3. Is this an opportunity for investors to capitalize on? Why?
4. Is this opportunity open to investors with a large cash stack? Or is open to new investors as well?
5. Why is every news station raving about it?

Again, would love to hear your thoughts, I am 17 and would love to be exposed to different views or information. Thank you!

They're selling shares in Aramco because they need cash. The prolonged downturn in oil prices means they've had to cut back on some of the subsidies their citizens enjoy such as the cheap gasoline, etc. The royals are terrified of a potential Arab Spring, so they're keen on keeping on keeping the masses happy. IPOing part of Aramco is one lever they can pull to generate some immediate cash. They can always offer more down the line if needed.

Aramco is massive but from my understanding, they're only IPOing the downstream (refining) business. Note they aren't going public with the upstream (oil producing) business. For decades, the world has wondered how much oil the Saudis really have. If the producing side of the business were to open up to the public, they would likely have to disclose this, which they don't want to do. In short, this is pulling back part of the curtain on Aramco.

There may be a minimum investment amount to get in on the IPO but after that, you should be able to buy as much or as little as you want. Whether or not it's a good investment or not depends on what P/E multiple you're paying and what the long term prospects of the company look like.
 

WJK

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They're selling shares in Aramco because they need cash. The prolonged downturn in oil prices means they've had to cut back on some of the subsidies their citizens enjoy such as the cheap gasoline, etc. The royals are terrified of a potential Arab Spring, so they're keen on keeping on keeping the masses happy. IPOing part of Aramco is one lever they can pull to generate some immediate cash. They can always offer more down the line if needed.

Aramco is massive but from my understanding, they're only IPOing the downstream (refining) business. Note they aren't going public with the upstream (oil producing) business. For decades, the world has wondered how much oil the Saudis really have. If the producing side of the business were to open up to the public, they would likely have to disclose this, which they don't want to do. In short, this is pulling back part of the curtain on Aramco.

There may be a minimum investment amount to get in on the IPO but after that, you should be able to buy as much or as little as you want. Whether or not it's a good investment or not depends on what P/E multiple you're paying and what the long term prospects of the company look like.
And I assume that you must be a qualified investor in order to get in on the IPO. Anyone can buy stocks later.
Why? Yes, they need the money. When oil prices fell suddenly from $128 per barrel to $35, it was estimated that they needed to receive at least $100 per barrel to pay for their social programs. I also saw a study that estimated that they had 18 months of reserves before they were going to have to do something to keep everything going. That was a few years ago. Prices have come up some, but not to where they need them. Since then, the USA has become energy independent and has become an exporter. We were once one of their biggest customers and now we compete with them. They have been attacked by Iran with major damages to their infrastructure. Ships carrying oil have been attacked and/or captured. They're having to pay for our soldiers and war machine to protect their facilities. They are buying military hardware. The world is no longer safe for them anymore. Things have really changed.
 

Kid

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The running out of cash seems to be biggest culprit.

Other thing is that they have new program in place to invest worldwide into startups etc to get less dependent on oil.
 

MHP368

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Note they aren't going public with the upstream (oil producing) business. For decades, the world has wondered how much oil the Saudis really have. If the producing side of the business were to open up to the public, they would likely have to disclose this, which they don't want to do

Ahh , thanks for digging that up.
 

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