Saudi Aramco’s riches disguise its risks: Fuel for Thought

Saudi Aramco is by far the most profitable company on the planet and produces more oil than any other single entity, but there are still doubts about the viability of its stalled initial public offering. The problem for Aramco is that its weaknesses are as obvious as its strengths. Riyadh’s dream of raising $100 billion by selling a 5% stake in the state-owned oil giant had seemed entirely dead until the company opened its books. Just over a week ago, Aramco gave a rare glimpse into its financial treasure chest and revealed a pot of gold, which has reawakened interest in its potential listing. At $224 billion, its earnings before interest, tax, depreciation and amortization are three times the size of Apple. The $111 billion the company made in net profit last year makes it bigger in sheer earnings power than ExxonMobil, Shell and BP combined. Financial analysts and bankers may still question the lofty valuation of $2 trillion desired by Saudi Arabia’s Crown Prince Mohammed bin Salman, but they can no longer question Aramco ’s gigantic balance sheet. At the wellhead, Aramco is also insanely efficient when compared to international oil companies. According to this week’s disclosure, it is… continue reading

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