Breakingviews - #Saudi Aramco is big, just not big enough | Reuters

Breakingviews - Saudi Aramco is big, just not big enough | Reuters:

Saudi Aramco is enormous – staggeringly so. Yet by one measure that matters a lot – the $2 trillion valuation envisaged by Crown Prince Mohammed bin Salman – it’s still not enormous enough.

The world’s oil producer disclosed the state of its finances for the first time on Monday as part of a bond issue to fund the $69 billion purchase of a stake in Saudi Basic Industries Corp (SABIC). Titillating details include Aramco’s towering $224 billion of EBITDA, and much new information about the way the company works with its sole shareholder, the government of Saudi Arabia.

It helps shed light on the question of what Aramco’s main crude-oil business is worth, adding flesh to the bones of a valuation Breakingviews laid out back in 2017 in an interactive calculator. At that time, the company was flirting with an initial public offering, which MbS said could value Aramco at $2 trillion. By Breakingviews’ estimates, using a discounted cash-flow valuation, that target was about twice what Aramco was actually worth.