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It's going to be the biggest event in energy market history, but investors still hardly know about it. That's why we're bringing you the three biggest Saudi Aramco IPO facts that investors need to know now.
Here's why the Saudi Aramco IPO is such a huge deal…
Formally called the Saudi Arabian Oil Co., Aramco is Saudi Arabia's state-owned oil firm. It sits on roughly 261.1 billion barrels of oil reserves. That dwarfs the 24.8 billion barrels of reserves owned by Exxon Mobil Corp. (NYSE: XOM) – the biggest independent oil company in the United States. It also produces more than 10% of the world's oil supply every single day.
While we know plenty about the company, we know very little about what's sure to be the biggest IPO ever.
Here are the three biggest pieces of information investors are dying to know about the Saudi Aramco IPO…
3 Must-Know Saudi Aramco IPO Facts Left to Deliver
Unknown Saudi Aramco IPO Facts No. 3: The Gigantic Valuation
When the offering was announced in January, speculation about Aramco's valuation ran wild. Both Bloomberg and RBS Research estimated the Saudi Aramco valuation to be between $2 trillion and $3 trillion. The Saudi government valued it at the high end of that range, stating the company was worth $3 trillion.
Editor's Note: Exxon just reported Q2 earnings and widely missed expectations. But that's not the only reason you should avoid the stock – and its peers…
Although we won't know the exact number until the IPO, a $3 trillion valuation would make Aramco the most valuable company ever. It would be more than eight times the size of Exxon's $365.7 billion valuation as of today (Wednesday, Aug. 3).
Unknown Saudi Aramco IPO Facts No. 2: The Huge IPO Price
Another area of speculation is the exact price of the Saudi Aramco initial public offering. Although no IPO price has been announced, the Saudi government plans to sell 5% of the company to the public. Analysts estimate that stake would raise as much as $150 billion in proceeds.
If the Saudi Aramco IPO raises $150 billion, it would shatter all global IPO records. The biggest IPO ever – Alibaba Group Holding Ltd. (NYSE: BABA) – raised only $21.8 billion. Data from Renaissance Capital – a manager of IPO-focused ETFs – shows Aramco would raise more proceeds than those of the eight biggest IPOs of all time combined.
But the Saudi Aramco IPO price is nowhere near as crucial as our No. 1 fact.
That's because this undisclosed piece of info will be the turning point in the global energy market…
Unknown Saudi Aramco IPO Facts No. 1: The Saudi Aramco IPO Date
Neither Aramco nor the Saudi government have announced an official date for the offering. But the government has said the Saudi Aramco IPO will happen in 2017.
The Kingdom may want to hold off on the deal and wait for the oil market to stabilize. Back in June, Bernstein Research noted Saudi Arabia will want to take Aramco public when oil prices are favorable. After all, WTI crude oil prices trade just above $41 a barrel. That's far below the mid-$50 price range needed for producers to profitably drill for oil.
Regardless of when the Saudi Aramco IPO hits, there's no doubt it will be the biggest event in both oil history and Saudi history. Money Morning Global Energy Strategist Dr. Kent Moors says the sale of the firm will be unlike anything the country's done before.
"The Aramco IPO signals a big change in Saudi Arabia's strategy," Moors – an oil market veteran who's advised U.S. and Russian energy agencies – noted in April.
"Saudi Arabia has been reluctant to sell a percentage of its crown jewel company, because doing so requires revealing important information about the country's oil fields that have been held in secrecy until now."
Stay updated on everything Saudi Aramco. Follow the author on Twitter at @AlexMcGuire92.