Saudi Aramco said it was ready for an IPO, as it opened itself up to scrutiny through a conference call with financial analysts from some of the world’s biggest institutions.
Khalid Al-Dabbagh, chief financial officer of the state oil company, fielded questions from experts in energy, finance and investment. His message to international investors was that Aramco is in good financial health, pursuing its long-term strategic objectives, and is ready to come to stock markets through an initial public offering (IPO) whenever the Kingdom’s government, the owner of Aramco, decides the time is right.
Al-Dabbagh, who was speaking from the group’s Dammam headquarters, said: “We have delivered strong and unmatched financial results despite the lower oil price and volatile market conditions. This is a testament to our resilience.”
Aramco earlier unveiled a net income of $46.9 billion for the first half of 2019 — more than the profits of all independent oil majors combined — on revenues of $146.9 billion. Both figures were down from the same period in 2018, mainly because of the lower oil price and higher expenditure.
Post-results conference calls are common for big companies after details of financial performance have been sent to the appropriate authority — in this case the London Stock Exchange (LSE), where Aramco bonds are listed.
The company is ready for the IPO, but the timing is a shareholder issue, and is dependent on their perception of market conditions.
But it was the first time Aramco has invited interrogation from investment analysts, and a sign it is gearing up for further engagement in the global financial markets, including what will almost certainly be the biggest share offer in history.
In the 30-minute webcast, Al-Dabbagh took calls from nine analysts from global investment institutions. Most of the questions sought clarification or further details of what had already been announced on the LSE, but he also hammered home some of the big messages Aramco was trying to get across. Al-Dabbagh underlined the commitment to expansion in the downstream business, Aramco’s environmental priorities, and its determination to ensure supply and delivery of oil supplies to the world. He also reassured analysts that the $70 billion merger with SABIC, the Kingdom’s industrial giant, was on track for completion “very soon.”
Irene Himona, managing director for oil and gas at French bank Societe Generale, asked about future dividend policy, which could be a crucial factor in deciding the attractiveness of shares in an IPO.
Al-Dabbagh said that dividends would be decided according to sustainability, affordability and benchmarking with its peer group in the oil industry which already pay dividends.
Richard Segal, senior analyst at Canadian financial giant Manulife Asset Management, asked for an update on the IPO. “The company is ready for the IPO, but the timing is a shareholder issue, and is dependent on their perception of market conditions,” Al-Dabbagh answered.—Arab News