MEOG: Aramco on sale, again

This week’s MEOG covers the potential for Saudi Aramco to list more shares and a major gas find in the UAE.

State-owned Aramco is reported to be holding early talks about the potential listing of more of the company’s shares, in a move seen as raising significantly more than the firm’s 2019 initial public offering (IPO).

Sources were quoted this week by various media outlets, including Wall Street Journal, Bloomberg and Dow Jones, as saying that the company is working with advisers to establish a plan to float additional shares on Riyadh’s Tadawul All Share Index (TASI) stock exchange and potential secondary listing in London, Singapore or another international exchange.

While the discussions remain in a preliminary stage, Dow Jones quoted a source as saying that around 2.5% of the company’s shares could be sold. With Aramco currently valued at around $1.97 trillion, this could raise almost $50bn.

The move comes as Aramco, which in Q2 2020 slashed its capital expenditure budget for the year by around $12bn in response to falling oil prices and the coronavirus (COVID-19) pandemic, has been buoyant in recent months, with company finances propped up as crude prices edge towards $100 per barrel. The firm is expected to announce massively improved performance when it publishes its full-year 2021 results in March.

Meanwhile, Abu Dhabi National Oil Co. (ADNOC) last week announced the discovery of a significant gas deposit in the Offshore Block 2 concession, which is operated by Italian firm Eni following its award in the second competitive bid round.

Results from the first exploration well gave an indicative resource size of 1.5-2 trillion cubic feet (42.5-56.6bn cubic metres) of raw gas in place and mark the second significant find reported in the last eight weeks, following the 1bn barrels of oil equivalent (boe) announced by Japan’s Inpex at Onshore Block 4 in December.

Eni was awarded a 70% stake in the nine-year exploration phase for the 4,033-square km Offshore Block 2 in 2019, with Thailand’s state-owned PTTEP holding the remainder.

Following the exploration phase, the concession could be extended for a 35-year development and production phase, in which ADNOC has the customary option to take a 60% stake.