Saudi Aramco, World's Most Profitable Company, Will Make First Public Offering The oil company said it will sell an unspecified number of shares on a Saudi Arabian exchange. Its valuation could be $1.5 trillion, and it may be the world's biggest IPO.
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Saudi Aramco, World's Most Profitable Company, Will Make First Public Offering

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Saudi Aramco, World's Most Profitable Company, Will Make First Public Offering

Saudi Aramco, World's Most Profitable Company, Will Make First Public Offering

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  • <iframe src="https://www.npr.org/player/embed/775878235/776006312" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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DAVID GREENE, HOST:

So the world's most profitable company is not Apple or Google or Walmart. It is Saudi Aramco, the oil giant that's owned by the government of Saudi Arabia. And that company will make its first public offering next month. NPR's Laurel Wamsley tells us what this means.

LAUREL WAMSLEY, BYLINE: When Saudi Aramco CEO Amin Nasser refers to the company's current ownership, he speaks in the singular.

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AMIN NASSER: Our shareholder.

WAMSLEY: That shareholder is the Saudi royal family. But Saudi Aramco is no vanity project. The company made over $100 billion in profit last year, and it supplies one-tenth of the world's crude oil. That makes Aramco's announcement that it would be selling a small slice of its shares a very big deal.

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NASSER: We are proud of the listing of Aramco. It will increase our visibility internationally. We are a very strong company.

WAMSLEY: Aramco's valuation is estimated by some to be about $1.5 trillion.

ELLEN R WALD: It's a massive, massive company.

WAMSLEY: That's Ellen R. Wald, author of a book about Saudi Arabia and Aramco called "Saudi, Inc." Aramco will debut next month on a Saudi Arabian exchange rather than on a bigger market in New York, London or Hong Kong. That will shield the firm from tougher disclosure requirements and shareholder lawsuits, but not being in a bigger exchange will limit the pool of capital Aramco can access. The disclosures Aramco has made to prepare for the IPO have revealed a lot that was unknown about the company's finances and how it can be so incredibly profitable.

WALD: It produces oil for so much less than anyone else out there. In the United States, a fracking company is lucky if it can break even at $50 a barrel. Aramco is getting oil out of the ground for something like $2.84.

WAMSLEY: Saudi Arabia is blessed with highly accessible oil reserves. The company has also invested in infrastructure that makes it cheap to get the oil from the ground. The IPO announcement comes less than two months after Aramco's oil facilities were struck by drones in an attack that Saudi Arabia blamed on Iran. The country's oil output was temporarily cut in half by the attack and led to short-term price fluctuations. But Aramco Chairman Yasir Al-Rumayyan called that a non-event financially, saying futures traders barely took notice.

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YASIR AL-RUMAYYAN: And that means it is really safe. That's what the money is saying.

WAMSLEY: Aramco's big profits will attract qualified investors from around the world. Wald says that means that lots of people may end up investing in Aramco without being aware of it, say if their pension fund decides to buy in.

WALD: For some people, that could really be a problem. People have issues with Saudi Arabia, with their treatment of women, their issues with human rights. They have issues with fossil fuels. So people should be aware that this is happening and that this is something that can touch their investments even if they haven't actively decided to go into this.

WAMSLEY: And while the IPO means that investors can buy Aramco, their slice of the pie will be small for now. That single shareholder, the Saudi kingdom, is expected to sell no more than 3% of the company. Laurel Wamsley, NPR News.

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