Press Release

Saudi Aramco Needs More Time For IPO Pitch

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Saudi Aramco has delayed its IPO again, as investors ask tough questions about its financial obligations and its security risks. Aramco could be valued between $1.1-1.3 trillion, according to Energy Intelligence calculations—well below the crown prince’s original target.

A listing of at least 2% of Aramco on the domestic Tadawul exchange has been postponed until November or later, as the company makes its pitch to cornerstone investors. The timing is hardly ideal for the giant IPO, given softer oil prices and cooling sentiment toward oil equities, but market conditions seem unlikely to improve anytime soon. Aramco plans to follow the domestic listing with an international IPO, although a New York or London listing would create litigation exposure.

Aramco recently promised a base dividend of $75 billion for 2020, seeking to assure investors of a healthy payout ratio. The government also cut the company’s royalty rate at oil prices below $70/bbl. Still, investors are wary of the company’s financial obligations to the state, as well as its vulnerability to future attacks on its facilities.

In its annual Aramco corporate strategy profile, Energy Intelligence estimates a potential valuation of the company at $1.28 trillion, based on a Brent price of $60/bbl and production at 10 million b/d. The valuation is based on a free cash flow yield average for H1’19 for the supermajors plus Equinor, Rosneft and PetroChina.

“Saudi Arabia is determined to push ahead with the IPO, but there is still a disconnect between investor demands and government expectations,” says Ben Cahill, Director with Energy Intelligence’s Research & Advisory division in Washington, D.C. “Aramco is on the back foot, especially in convincing investors that it should enjoy a premium to the supermajors.”

Energy Intelligence is the leading independent provider of news, unbiased analysis and reliable data and research for the global energy industry.

The Research & Advisory group at Energy Intelligence has just issued a new corporate strategy profile which examines Aramco’s core segment strategies, including oil expansion projects, development of domestic natural gas resources, as well as newer ventures in LNG, downstream and petrochemicals.


Note to Editors:

For more details on Energy Intelligence’s Saudi Aramco analysis, please contact:

Ben Cahill
Director, Research & Advisory, Energy Intelligence
+1 (202) 662-0707 |

Click here to download a complimentary copy of the Executive Summary on Aramco’s IPO challenges, earnings forecast and valuation.

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