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Sun 3 Nov 2019 12:32 PM

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Key facts from Saudi Aramco's intention to float in Riyadh

The final offer price, number of shares to be sold and percentage of the shares to be sold will be determined at the end of the book-building period

Key facts from Saudi Aramco's intention to float in Riyadh

Saudi retail investors will be eligible to receive one share for every 10 allotted shares if they continuously and uninterruptedly hold the shares for 180 days from the first date of trading and listing on the exchange

Saudi Aramco on Sunday announced its intention to proceed with an initial public offering in Riyadh.

The final offer price, number of shares to be sold and percentage of the shares to be sold will be determined at the end of the book-building period.

Retail investors:

  • Saudi retail investors will be eligible to receive one share for every 10 allotted shares if they continuously and uninterruptedly hold the shares for 180 days from the first date of trading and listing on the exchange
  • Maximum bonus shares will be 100 per investor
  • Retail investors can be non-Saudi natural person who is resident in the kingdom and any GCC national

Dividend:

  • Board intends to declare aggregate ordinary cash dividends of at least $75 billion for 2020, in addition to any potential special dividends
  • Nov. 1, Aramco declared an ordinary dividend of $13.4 billion for quarter ended Sept. 30
  • To declare an interim (ordinary) dividend of a maximum of $9.5 billion, after obtaining the necessary approvals from the board, prior to the date of allocation of the shares to the institutional subscribers and individual investors
  • These dividends will be paid to the government (in its capacity as the sole shareholder in the company) and investors in the shares will not be entitled to any portion of these dividends regardless of when they are paid
  • Subject to certain exceptions, the company will declare an interim (ordinary) dividend of $3.9 billion with respect to the period from (and including) the date of allocation of the shares to the institutional subscribers and individual investors through Dec. 31
  • It will be paid from the company’s cash-on-hand

Capital expenditure

  • 2020 capital expenditure to be between $35 billion to $40 billion
  • 2021 capex $40 billion to $45 billion
  • Can cut capex if oil prices fall
  • Believes it retains significant flexibility to reduce capital expenditures in a lower oil price environment
  • In medium term, the company expects to spend 35% on liquids related expenditures, 40% on gas-related expenditures and 25% on downstream related expenditures

9-month financials

  • Revenue, other income related to sales at $244 billion
  • Net income at $68 billion
  • Free cash flow $59 billion
  • Capex at $23 billion

Royalties and taxes:

  • Aramco, government amend concession effective as at Jan. 1
  • Reduces royalty on crude oil and condensate output to 15% from 20% on Brent prices up to $70 per barrel
  • Increases marginal royalty rate to 45% from 40% on Brent prices above $70 per barrel up to $100 per barrel
  • Increases marginal royalty rate to 80% from 50% on Brent prices above $100 per barrel
  • Cuts tax rate on downstream business to 20% from the 50% - 85% multi-tiered range on the condition that the Aramco consolidate its downstream business under the control of a separate, wholly owned unit before 31 December 2024
  • Period for which Aramco will not be obligated to pay royalties on condensate production extended for an additional 10 years after the current five-year period ending on 1 January 2023; may be further extended for subsequent 10-year periods subject to government approval