• Saudi Aramco said it is ready to go public, but the Saudi government will decide when market conditions are optimal for what would be the largest IPO ever.
• The company, in its first-ever investor conference call, said that its profit was down in the first half due to lower and volatile oil prices, but that it is resilient with the lowest production costs in the industry.
• The company also announced free cash flow of $38 billion in the first half, a special dividend of $20 billion and said it has enough room to buy a stake in India’s Reliance.
 
Aug 12, 2019 -- Saudi Aramco’s CFO, in the company’s first-ever conference call, on Monday told investors that the company is ready to go public, but that the timing will be up to its owner, the Kingdom of Saudi Arabia.
 
“Basically, the company is ready for the IPO. Now the timing of the IPO itself, this is a shareholder’s issue, and they will announce it depending on their perception of what would be the optimum market condition,” said Khalid al-Dabbagh, chief financial officer, reiterating the company’s previous stance.
 
Sources have said that the Saudi government, encouraged by the success of Aramco’s $12 billion debt offering, would like to move its plans for the IPO forward, and issue stock in 2020. The offering is expected to be the largest new issue ever, and represent just a small portion of the company’s equity. Saudi Crown Prince Mohammed bin Salman would like to see Aramco valued at $2 trillion, about $500 billion more than bankers are currently estimating, according to sources.
 
The company faces tough markets, where oil prices are volatile and near the 2019 low. Brent crude futures were trading below $60 a barrel Monday, and are down 18% over the past year. At the same time, energy stocks have underperformed, with the S&P energy sector up just 1.7% year to date, making it the worst-performing sector and well behind the S&P 500ʹs 2019 gain of about 16%. “We, in Saudi Aramco, have delivered strong and unmatched financial results, despite lower oil prices and volatile market conditions. This is really a testament to our resilience,” said al-Dabbagh, noting the talks are in the early stages. (CNBC)