NEW YORK: The prospectus for the initial public offering (IPO) of Saudi Aramco is 鈥渧irtually ready,鈥� including a revised valuation of the oil giant鈥檚 reserves, sources close to the company鈥檚 plans told Arab News.
The news came as 抖阴短视频鈥檚 Crown Prince Mohammed bin Salman said OPEC is seeking to cooperate with Russia on oil supplies for the next 10-to-20 years. The crown prince, currently leading a Saudi delegation in the US, added that OPEC has agreed on the general outlines for long-term oil supply cooperation with Russia.
Sources close to Aramco in New York, who declined to be identified because details of the prospectus were not in the public domain, said the plans for an IPO were on track for later this year, and that the prospectus was awaiting government approval and some finalizing of details, like valuation and listing venue. 鈥淭here are a few spaces left blank but (the prospectus) is almost ready to go,鈥� a source said.
News that the reserves valuation is complete will be a significant boost for the IPO planning process. Some stock exchanges impose tight restrictions on reserves estimates by oil companies. The Aramco valuation has been completed on the basis of a sample of Aramco鈥檚 oil fields in the Kingdom by DeGolyer and MacNaughton, a petroleum consulting firm based in Dallas, Texas.
Aramco鈥檚 publicly stated reserves have for a long time been reported by the company at a level of around 260 billion barrels, but the person said that DeGolyer鈥檚 new assessment could show a 鈥渟ignificant鈥� increase from that level. A reserves estimate materially higher than 260 billion barrels would have important implications for the company鈥檚 valuation in an IPO.
There have been reports in some outlets that Aramco鈥檚 advisers were struggling to meet the valuation of $2 trillion put on the company when the IPO was announced two years ago, and that investors were less than enthusiastic about what would be the biggest IPO in history.
Chief Executive Amin Nasser used an television interview in the city to confirm that the IPO was still on track for the second half of 2018, and sought to counter suggestions that American investors were 鈥渃ool鈥� on the potential listing.
鈥淚 think there is a lot of investor appetite. There is a lot of demand for the listing of Saudi Aramco which we will see when we go on our roadshow. Preparations have never stopped. We always said we鈥檇 be ready as a company for a listing in the second half of 2018,鈥� Nasser told Bloomberg TV.
He added that the venue and timing of the IPO were decisions that would be made by the government of 抖阴短视频.
He indicated that an IPO with an international element was still in the company鈥檚 plans. 鈥淭here are a lot of venues to list in other than the Kingdom, for sure,鈥� he said.
Sources close to the plans said however that the deadline for a listing on a New York stock market was pressing, and if Aramco did not announce its plans soon it could be too late to float shares on a US exchange this year. A listing in London, where the regulations are lighter, would still be possible.
However, a two-stage IPO 鈥� first on the Riyadh stock exchange, the Tadawul, with a commitment to New York or London later 鈥� was still an option under consideration, the person said.
Aramco has been gauging investor sentiment in a series of meetings this year with investing institutions. A major topic of interest is the level dividend Aramco will pay investors when it is listed.
Nasser told Bloomberg that Aramco was considering a dividend comparable with the 6 percent yield that some big independent oil companies pay investors. 鈥淲e will be competing with the best for sure,鈥� he said. Potential investors would be informed of dividend plans on the roadshow, he added.