An oil giant wants an IPO: valuations far exceed the total of three barrels of oil

category:Finance
 An oil giant wants an IPO: valuations far exceed the total of three barrels of oil


By the end of October 11, the total market value of three barrels of oil was 1129.239 billion yuan for PetroChina (601857. SH), 615.042 billion yuan for Sinopec (600028. SH), and 537.555 billion Hong Kong dollars for CNOOC (00883. HK), totaling about 2.23 trillion yuan.

The Worlds Largest IPO

The IPO process of Saudi Arabias Amy, the worlds largest oil company, has been drawing global attention since the news of its planned listing came out in January 2016.

In order to compete for the international listing sites of Saudi Arabia and Amy, many stock exchanges, such as New York, London, Hong Kong, Tokyo, Singapore and so on, have launched fierce competition. They have repeatedly spoken publicly and contacted Saudi Arabia and Amy to extend olive branches to them.

And a series of recent signs show that Saudi Arabia and Amys IPO process has made substantial progress.

In mid-October, the Saudi Finance Minister publicly stated that Saudi Arabias Amy IPO was progressing as planned and was likely to take place in the next 12 months.

This week, media quoted people familiar with the matter as saying that Saudi Amy, the worlds largest oil producer, is expected to submit an IPO prospectus by the end of this month. It is reported that the prospectus will be issued in Arabic on October 25 and in English two days later.

If all goes well, its shares may be listed on the Saudi Tadawul Stock Exchange in late November or early December.

In any case, this will be far more than the market value of Chinas three barrels of oil combined.

As of October 11, China Petroleum (601857.SH) had a total market value of 112.239 billion yuan, Sinopec (60028.SH) had a total market value of 615.542 billion yuan and China Offshore Oil (00883.HK) had a total market value of HK $537.555 billion, totaling about 223 trillion yuan.

It is understood that Saudi Arabia, when preparing for its IPO in 2018, had planned to sell 5% of its shares in domestic and overseas markets and raise about $100 billion. But the latest plan has been revised to initially sell about 2% of the shares in Saudi Arabias domestic market, with the financing scale shrinking to $40 billion. Even so, Saudi Arabia and the United States will remain the largest IPO in global history.

In September 2014, Alibaba was listed on the New York Stock Exchange, with an IPO financing scale of US$25.03 billion, a record of global IPO financing scale.

Net profit is nine times that of three barrels of oil

With the advancement of the IPO process, the operational details and financial data of the worlds largest oil company will also emerge.

According to the available data, the net profit of Saudi Ami in 2018 is about twice that of Apple, and the profit-making ability of three barrels of oil is not to be underestimated.

In June 2019, Saudi Arabia and the United States released their first independent financial report, unveiling the financial veil of the worlds oil giant.

In 2018, the total revenue of Saudi Arabia and the United States reached 1334.8 billion rials ($355.9 billion), up 34.7% from 990.7 billion rials ($264.2 billion) in 2017. Net profit reached 416.5 billion rials ($111.1 billion), up 46.3% from 284.6 billion rials ($759) in 2017. In 2018, Saudi Arabias total assets amounted to 1346.2 billion rials ($359 billion), an increase of 22.1% from 1012.6 billion rials ($294 billion) in 2017.

Expert analysis shows that Saudi Arabia and Amis revenue growth is due to the increase in the average international crude oil price from $52.7 per barrel in 2017 to $70 per barrel in 2018, an increase of 33%.

Afterwards, in July 2019, Fortune magazine published the list of the worlds top 500 companies, Saudi Arabia and Amy for the first time, and became the worlds most profitable company, its profit in 2018 reached 11 billion US dollars, far ahead of the second Apple company of 59.5 billion US dollars. In terms of annual revenue, Ahmed Oil ranks sixth in the world at $355.9 billion.

According to optimistic estimates from Saudi Arabia, Ahmeds oil valuation is at least $2 trillion. According to Bloombergs estimates in 2018, the theoretical valuations of oil reserves and natural gas reserves of upstream assets of Ahmed and America are US$2.088 trillion and US$338 billion respectively, while the theoretical valuations of refining and petrochemical operations of downstream assets are US$34.5 billion and US$39.1 billion respectively. If a 61.4% discount is given according to industry standards, the companys upstream and downstream assets can be valued at $1.535 trillion.

Saudi Amys total revenue in 2018 exceeded that of ExxonMobil, the largest oil company in the United States, and its net profit was almost twice that of Apple.

In terms of three barrels of oil, in 2018, PetroChinas operating income was 235.588 billion yuan, with net profit of 525.585 billion yuan; Sinopecs operating income was 289.179 billion yuan, with net profit of 63.089 billion yuan; and China Offshore Oils operating income was 219.103 billion yuan, with net profit of 52.688 billion yuan.

Compared with Chinas three barrels of oil, Saudi Arabias total revenue in 2018 is about half of that of three barrels of oil, while its net profit is nearly nine times that of three barrels of oil.

Source: Yang Zeyu-NF6036, Responsible Editor of Economic Reporting in the 21st Century