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Press Release

Saudi Aramco Valuation Could Be $1.3 Trillion

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At current prices and production volumes, Saudi Aramco could be valued at $1.3 trillion, according to Energy Intelligence calculations—well below Crown Prince Mohammed bin Salman’s original target, but perhaps enough to satisfy skeptics at home. Even $100 oil would not deliver a $2 trillion valuation.

The Saudi Aramco IPO signals Saudi Arabia’s intent to modernize the Kingdom, as outlined in the Vision 2030 plan spearheaded by Crown Prince Mohammed bin Salman (MBS). Compared with this strategic goal, raising cash for the state is an important but secondary driver.

IPO preparations have been an overwhelming focus for the company, but the domestic listing has been pushed back to 2019. There is speculation that an international listing may not happen. Disclosure requirements, litigation risks and broader strategic issues could convince MBS that the drawbacks of an international listing outweigh the rewards.

The critical question is how much Saudi Aramco is worth. In its Business & Competitive Intelligence (BCI) strategy profile of Saudi Aramco, Energy Intelligence calculates that with oil at $80/bbl and production at 10 million b/d, net income for this year could be $73 billion. A conservative earnings multiple suggests a potential valuation of $1.31 trillion. Even at $100/bbl, the valuation would fall far short of MBS’s original $2 trillion target, which has now been set aside.

“There are important political and strategic drivers for the IPO, but it faces challenges—including the perception that the Saudis are giving away the crown jewels,” says Ben Cahill, Manager with Energy Intelligence’s Research & Advisory division in Washington, D.C. “Clearly the IPO could deliver a windfall for the state, but skeptics argue that the tradeoffs are too great.”

Leaked financial data revealed by Bloomberg show impressive profitability for Saudi Aramco even at lower oil prices. Its net income last year may have reached $70 billion—a figure that dwarfs the Supermajors and listed NOCs.

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

-ENDS-

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

Ben Cahill
Manager, Research & Advisory, Energy Intelligence
+1 (202) 662-0707 | bcahill@energyintel.com

Click here to learn more about our views on what’s driving Saudi Arabia’s oil policy: http://www2.energyintel.com/l/19202/2018-05-24/bp86f1/19202/195778/BCI_Saudi_Aramco_Profile_Summary_May_2018.pdf

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Press Release (Marketing)
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