Energy

Saudi Oil Company May Be Worth $700 Billion Less Than The Prince Claims

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Saudi Aramco could be valued at a level far below what Saudi Crown Prince Mohammed bin Salman (MBS) projected, even as oil prices continue their upward trajectory.

The state-owned company could be valued at $1.3 trillion, according to Energy Intelligence calculations. The number is well below what MBS projected. Even $100 oil would not deliver a $2 trillion valuation, the calculations show.

Energy Intelligence calculated in its Business & Competitive Intelligence (BCI) strategy profile of Saudi Aramco that with oil at $80 per barrel net income for 2018 could be $73 billion. Even at $100 per barrel the valuation would fall far short of MBS’s original $2 trillion target.

The difference between MBS’s projection and the BCI profile comes as Saudi Aramco IPO signals the crown prince’s intent to modernize the Kingdom.

“There are important political and strategic drivers for the IPO, but it faces challenges—including the perception that the Saudis are giving away the crown jewels,” Ben Cahill, Manager with Energy Intelligence’s Research & Advisory division, said in the group’s calculation.

American oil and gas hydrocarbon production, meanwhile, hit a record high in 2017 at nearly 30 million barrels per day of oil equivalent, according to a May 21 report from U.S. Energy Information Administration.

Monday that U.S. “petroleum production increased by 745,000 barrels per day (b/d) in 2017, driven by a 21 percent increase in oil prices to approximately $65 per barrel.” Of that, “crude oil and lease condensate accounted for 60 percent of total petroleum hydrocarbon production in 2017, and natural gas plant liquids accounted for 24 percent.”

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