This is really not the time I'd be investing that heavily in Aramco. 30 Years ago, certainly, now... not so much.
30 years ago you would have needed a blue water navy and nuclear weapons.
And the fact that you won't next year tells you something ...
Saudi Aramco Plans World's Biggest IPO
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Re: Saudi Aramco Plans World's Biggest IPO
#42If it were possible to get in short on this (it's usually not, right after an IPO), that would be the best investment decision anyone's ever made. $2 trillion is ridiculous. Remember when PetroChina hit $1 trillion market cap in 2007, and it was supposed to be a huge milestone for publicly-traded state oil firms? Now they're at a little over a tenth of that. Every reason to expect that the same thing will happen here…
It's not so cut and dry. One reason Aramco is worth so much is that the cost to extract their remaining reserves (on a per barrel basis) are one third of costs in the U.S.
A collapse of oil prices may decimate the energy industry in the developed world (which extracts from offshore or unconventional sources) and would mean Aramco becomes the only supplier. Now obviously they wouldn't be able to raise prices beyond a certain level, but they have many decades of guaranteed cash flow remaining.
Re: Saudi Aramco Plans World's Biggest IPO
#43They're trying to get out now by selling to suckers who don't realize that most of their oil assets are worthless. I don't mean that they've falsified accounts of how much oil they have, I mean that most of it is going to stay in the ground because it won't be worthwhile to pump it out.
Re: Saudi Aramco Plans World's Biggest IPO
#44Earlier quoted context omitted.
>Saudi crude accounts for about 1 out of every 9 barrels of global production.
Production is analogous to revenue, and is the wrong measurement. Reserves matter more for market cap.
ok, still they have %20 of world reserve. so oil reserves worth 10 billions and %10 of world economy! in US we have more oil consumption than any other nation, do you spend %10 of your money on oil???
Re: Saudi Aramco Plans World's Biggest IPO
#45I'm curious about their long-term outlook. My understanding is that OPEC counties are currently desperate enough for money that they can't agree to limit output, thereby forcing the price further down. Anyone have better insight here?
I've heard two narratives, that being one of them. The other is that they're keeping output artificially high to lower the price of oil in hopes of "pricing out" alternative sources like shale.
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Re: Saudi Aramco Plans World's Biggest IPO
#46I've got your prospectus right here: http://rameznaam.com/wp-content/uploads/2014/10/Welcome-to-t...
And http://rameznaam.com/wp-content/uploads/2015/04/Nature-Clima... As soon as we hit $100/kWh in the next year or two, that oil is worthless [1] (Tesla will supposedly hit this target when the Gigafactory is at full capacity). Clean energy investments year over year: https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iWfsqt_Qmf9... [1] https://flowcharts.llnl.gov/content/energy/energy_archive/en...
That oil will still be worth trillions for the next two decades. It won't be worthless until the global economy has moved very substantially off of oil. It won't even plunge toward worthless until demand begins to dramatically fall off, which isn't going to occur in the next two or three years.
The Saudis will likely have time to liquidate a very large portion of Aramco and its oil assets before the market for oil dries up too much. In 20 years they can exhaust over half of their oil reserves (by some estimates, they'll be a net oil importer by 2030-2035). They'll sell well over ten trillion dollars worth of oil in that time.
It will take decades to shift the global economy and industry off of oil. In ten years, the majority of cars on the road globally will still be burning gasoline. That hopefully won't be the case in 20 though.
Re: Saudi Aramco Plans World's Biggest IPO
#47hm, just $100,000,000,000 for less than 5% of Saudi Aramco. That's quite low, valuing themselves at 2 trillion. Prior pie in the sky estimates had put them at 10 trillion dollar company. So maybe after the independent audit they'll release the shares, wall street traders will bid it up 500% and then they'll impress everyone with that share price performance and 10 trillion dollar valuation.
10 trillion is crazy! the US GDP is 16 trillion and world economy worth 100 trillion, to think one company worth this much is ....
GDP != Worth
Re: Saudi Aramco Plans World's Biggest IPO
#48Earlier quoted context omitted.
And http://rameznaam.com/wp-content/uploads/2015/04/Nature-Clima... As soon as we hit $100/kWh in the next year or two, that oil is worthless [1] (Tesla will supposedly hit this target when the Gigafactory is at full capacity). Clean energy investments year over year: https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iWfsqt_Qmf9... [1] https://flowcharts.llnl.gov/content/energy/energy_archive/en...
That oil will still be worth trillions for the next two decades. It won't be worthless until the global economy has moved very substantially off of oil. It won't even plunge toward worthless until demand begins to dramatically fall off, which isn't going to occur in the next two or three years. The Saudis will likely have time to liquidate a very large portion of Aramco and its oil assets before the market for oil dr…
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Re: Saudi Aramco Plans World's Biggest IPO
#49If the Saudi government thought that the company was a good investment, they would invest in it themselves and reap all the rewards, even if it meant they had to print currency to do so. In other words, they'd continue doing what they've done all along. Instead this seems like an "exit" event. A way to sell at the top and use the funds from the greater fools for other means.
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Re: Saudi Aramco Plans World's Biggest IPO
#50This may well be the biggest attempt ever to get out at the right time
Yeah. Back when theoildrum.com was running, they'd post the reports on reserves for Saudi Arabia. SA are developing new fields, but compared to their rate of extraction, I didn't think it looked too pretty in the long term.