When the Saudi Aramco IPO lands in New York City, it's going to be the biggest IPO of all time.
Saudi Aramco is the world's biggest oil company and is owned by Saudi Arabia. And when we say massive, we mean it: The company has 261 billion barrels of oil in reserves. That's nearly 10 times Exxon Mobil Corp.'s (NYSE: XOM), more than all of North America's oil reserves put together, and the equivalent of about 20% of the entire planet's oil reserves. It pumps out 10.3 million barrels per day -- twice as much as its closest competitor Rosneft, Russia's state-owned producer.
But the Saudi government is preparing to sell the company and list it on the New York Stock Exchange. Reuters reports "serious discussions" between the Saudis and NYSE representatives are underway, with the objective to "complete the IPO sometime in 2018," said Saudi foreign minister Adel al-Juberi.
"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," Money Morning Global Energy Strategist Dr. Kent Moors explained to readers.
Saudi officials have said they expect the IPO to value Aramco at $2 trillion.
If the market agrees, selling just 5% of Aramco shares to the public would raise $100 billion.
Here's what this massive IPO would look like relative to the biggest IPOs in history...
The NYSE is the largest and most liquid exchange in the world and is no stranger to global giants. For instance, it welcomed Chinese e-commerce leader Alibaba Group Holding Ltd. (NYSE: BABA) back in 2014, which was, at the time, the world's biggest IPO. Aramco would be another high-profile win for the exchange and would notch another hole in the "biggest" belt.
First, let's take a look at the biggest IPOs in history without Saudi Aramco:
Now, assuming the $2 trillion IPO will sell even a modest 5% of its shares to the public, here's how it would compare:
As you can see, Aramco would blow current record holder Alibaba out of the water, raising four times as much as Alibaba did on Sept. 8, 2014.
However, it's interesting to note that due to legal obstacles and rising oil prices, the Saudi government could be getting cold feet...
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According to Money Morning Global Energy Strategist Dr. Kent Moors, as long as OPEC's deal to cut oil production stays in place, oil prices could rise another 20% in 2017 alone. And with more revenue flowing back to the Saudi government, it may not be as willing to give up a portion of its crown jewel.
But if you are ready to profit from oil stocks now, you don't need to wait for the Saudi Aramco IPO...
We've got you covered with stock picks that could go even higher as oil continues to rebound, with the best oil stocks to buy in 2017.
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