World’s Largest Oil Firm (Saudi Aramco) To Postpone Initial Public Offering

The world’s largest oil firm, Saudi Aramco, has announced on Thursday, October 17^th, 2019 that it plans on delaying the “initial public offering” (IPO) until the results for third-quarter are released. It was further added that post-third-quarter performance review, investors will have more confidence in Saudi Aramco.

The firm had previously announced the initial public offering to begin by the end of October. Estimated at $20 billion, it has been a hot debate in the Kingdom’s Tadawul market as the largest, most anticipated public offering in history.

September 14^th Attacks Highlighted As A Cause For The Delay

Following the attack on two of its plants (Abqaiq and Khurais) on September 14th, the crude output for Saudi Aramco was threatened. As per the sources, the world’s largest oil firm is aiming at restoring the investors’ confidence by highlighting the performance for the third quarter before the plans for IPO are realized. If the valuation target is hit, or positive results are announced (post-attack), it will greatly improve the firm’s chances of a successful IPO.

Officials at Saudi Aramco have been silent about an expected date for listing or when the 3^rd quarters’ results will be declared. According to the information provided so far, however, the listing has been delayed by weeks.

According to Reuters’ report on Friday, Saudi Aramco has divulged that it is in regular contact with the shareholders and is keeping them informed. While the company is all-set for the initial public offering, the market conditions and shareholders will ultimately decide on the time to start IPO. Reuters had previously expressed concerns about the likelihood of the offering this year on September 24^th, following the attack on two of Saudi Aramco’s plants. The attacks were reported to have knocked out more than 5% (5.7 million barrels/day) of oil supply across the globe.

Crown Prince Had Initially Aspired For A Valuation Of $2 Trillion

The Wall Street has had its eyes set on the listing for three years, when Crown Prince Mohammed bin Salman first declared that the oil firm will soon be up for initial public offering. Owing to the concerns of global warming that have started to push the countries look for an effective alternative to fossil fuels, however, the $2 trillion valuation initially aspired by the Prince could not be realized. Such concerns have led to the rising pressure on oil prices and consequently on the equity value of the producers.

Energy Minister, Prince Abdulaziz Bin Salman, has been emphatic that the plan is merely postponed and the firm will soon be listed as originally announced. He further added that the production is being restored to the normal levels much faster than expected after the attacks, which has incited the debate of where to list Saudi Aramco in the international markets once again.