{"id":4175,"date":"2019-09-17T05:46:31","date_gmt":"2019-09-17T05:46:31","guid":{"rendered":"http:\/\/euromenaenergy.com\/?p=4175"},"modified":"2019-09-17T05:46:31","modified_gmt":"2019-09-17T05:46:31","slug":"attacks-on-saudi-oil-plants-risk-lowering-aramco-ipo-valuation","status":"publish","type":"post","link":"https:\/\/emimer.com\/?p=4175","title":{"rendered":"Attacks on Saudi Oil Plants Risk Lowering Aramco IPO Valuation"},"content":{"rendered":"<p>(Bloomberg) &#8212; As bankers discussed Saudi Aramco\u2019s initial public offering at the Ritz Carlton hotel in Dubai last week, a drone attack was being planned to hit the heart of its operations over the weekend. It caused Saudi Arabia to halve its oil output and may cut the valuation of Aramco\u2019s milestone deal.<\/p>\n<p>The giant oil producer has accelerated preparations for a share sale that could happen as soon as November in Riyadh. Dozens of bankers from\u00a0Citigroup\u00a0Inc (NYSE:<span class=\"aqPopupWrapper js-hover-me-wrapper\"><a id=\"5d80727aeac77\" class=\"aqlink js-hover-me\" href=\"https:\/\/uk.investing.com\/equities\/citigroup\" data-pairid=\"241\">C<\/a><\/span>). to JPMorgan Chase (NYSE:<span class=\"aqPopupWrapper js-hover-me-wrapper\"><a id=\"5d80727aeb04f\" class=\"aqlink js-hover-me\" href=\"https:\/\/uk.investing.com\/equities\/jp-morgan-chase\" data-pairid=\"267\">JPM<\/a><\/span>) &amp; Co. met last week to work on the deal, with analyst presentations scheduled for Sept. 22, people familiar with the matter have said.<\/p>\n<p>\u201cCrown Prince Mohammed bin Salman will push the company to demonstrate that it can effectively tackle terrorism or war challenges,\u201d analysts led by Ayham Kamel, head of Middle East and North Africa research at the Eurasia Group, said in a report. \u201cThe attacks could complicate Aramco\u2019s IPO plans.\u201d<\/p>\n<p>In an attack blamed by the U.S. on Iran, a swarm of drones laden with explosives set the world\u2019s biggest crude-processing plant ablaze. Floating a minority stake of the oil giant, officially known as Saudi Arabian Oil Co., is part of Prince Mohammed\u2019s efforts to modernize and diversify the economy.<\/p>\n<p>The attacks underscored geopolitical tensions in the region. Iran denied responsibility, which was instead claimed by Iranian-backed Houthi rebels in Yemen.<\/p>\n<p>Oil prices surged by the most on record to more than $71 a barrel after the strike removed about 5% of global supplies. The main Saudi stock index Sunday fell as much as 3.1%, leading losses in the Gulf.<\/p>\n<p>Back in 2017, investors suspected that Saudi government-related funds swooped in to support the market after the imprisonment of local billionaires at the Ritz-Carlton in Riyadh. That also happened amid the international crisis following columnist Jamal Khashoggi\u2019s murder at the Saudi consulate in Istanbul.<\/p>\n<p>Here\u2019s more from analysts and investors:<\/p>\n<p>Eurasia<\/p>\n<ul>\n<li>\u201cThe latest attack on Aramco facilities will have only a limited impact on interest in Aramco shares as the first stage of the IPO will be local. The international component of the sale would be more sensitive to geopolitical risks\u201d<\/li>\n<li>Current valuation estimates for Aramco and its assets might not fully account for geopolitical risks\n<ul>\n<li>NOTE: Prince Mohammed, the architect of the IPO, has said he expects Aramco to be valued at over $2 trillion, but analysts see $1.5 trillion as more realistic<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Al Dhabi Capital, Mohammed Ali Yasin<\/p>\n<ul>\n<li>\u201cI think this attack may delay the IPO even on the local exchange, and could affect the valuation negatively, as the investors have seen a live demonstration of the risk levels of the future revenues and business of the company. That was very low prior to this weekend attack\u201d<\/li>\n<li>\u201cAramco has one main source of revenue, oil. That is its strength, but now it is becoming its biggest weakness if it gets disrupted\u201d<\/li>\n<\/ul>\n<p>United Securities, Joice Mathew<\/p>\n<ul>\n<li>This \u201cwill force investors to go back to the drawing board and re-evaluate their risk models on Aramco\u201d<\/li>\n<li>\u201cEven though this is a rare event, which could be potentially categorized as 4 or 6 sigma levels, the geopolitical risk premium on Aramco\u2019s valuation model would show a sharp increase\u201d<\/li>\n<li>\u201cAs far as the pricing is concerned, my view is that there may not be much of an impact if the government is contemplating a 1% listing on the Tadawul. I think the government has the power and ability to influence the decisions of anchor investors there\u201d<\/li>\n<\/ul>\n<p>Tellimer, Hasnain Malik<\/p>\n<ul>\n<li>\u201cUltimately the security risk is not so acute that it outweighs oil price, oil output and free float drivers of the valuation\u201d<\/li>\n<li>This attack \u201calso provides an opportunity for Aramco to demonstrate the redundancy and resilience of its supply chain by minimizing disruption to customers and thereby helping to mitigate the valuation impact of this risk\u201d<\/li>\n<\/ul>\n<p>Qamar Energy, Robin Mills<\/p>\n<ul>\n<li>\u201cIt will be all but impossible to proceed with the IPO if there are ongoing attacks\u201d<\/li>\n<li>\u201cValuing Aramco like Shell (LON:<span class=\"aqPopupWrapper js-hover-me-wrapper\"><a id=\"5d80727aeb175\" class=\"aqlink js-hover-me\" href=\"https:\/\/uk.investing.com\/equities\/royal-dutch-shell-a-shr?cid=6593\" data-pairid=\"6593\">RDSa<\/a><\/span>) or ExxonMobil (NYSE:<span class=\"aqPopupWrapper js-hover-me-wrapper\"><a id=\"5d80727aeb298\" class=\"aqlink js-hover-me\" href=\"https:\/\/uk.investing.com\/equities\/exxon-mobil\" data-pairid=\"7888\">XOM<\/a><\/span>) gets us to about $1.2-1.4 trillion. But that would drop significantly if we apply company-specific risk factors\u201d<\/li>\n<\/ul>\n<p>Al Ramz Capital, Marwan Shurrab<\/p>\n<ul>\n<li>&#8220;The attacks could impact foreign sentiment for the IPO, but I don\u2019t see a substantial hit to the valuation at this stage&#8221;<\/li>\n<li>&#8220;Geopolitical risk has always been an important factor for valuations across the Middle East region. Aramco will have to demonstrate its financial resilience toward such incidences to gain investors confidence\u201d<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>(Bloomberg) &#8212; As bankers discussed Saudi Aramco\u2019s initial public offering at the Ritz Carlton hotel in Dubai last week, a drone attack was being planned to hit the heart of its operations&#8230;<\/p>\n","protected":false},"author":1,"featured_media":4191,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,23],"tags":[46,48,57,68,76,77,82,86,87,90,96,99,103,107,109,111,113,137,139,146,148,160,174,183,184,201,202,209,222,230,232,233,244,246,249,256,262,263,267,277,279,280,285,288],"class_list":["post-4175","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-politics","tag-aramco","tag-athens","tag-baroudi","tag-carbon","tag-climate","tag-climate-change","tag-co2","tag-cyprus","tag-decarbonising","tag-democracy","tag-doha","tag-eastmed","tag-egypt","tag-embargo","tag-emissions","tag-energy","tag-energy-peace","tag-gas","tag-gazprom","tag-greece","tag-greenenergy","tag-international-maritime-disputes","tag-lebanon","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-pollution","tag-poverty-alleviation","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-solar","tag-solar-power","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-turkey","tag-unclos","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/4175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4175"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/4175\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/4191"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}