Saudi Arabia's Oil Wealth Is About to Get a Reality Check

[rangerrebew]

Saudi Arabia's Oil Wealth Is About to Get a Reality Check
by Javier Blas
and Wael Mahdi
February 23, 2017, 12:00 PM EST February 24, 2017, 12:30 AM EST

    Wood Mackenzie said to estimate valuation at $400 billion
    Aramco IPO underpins Saudi Arabia’s economic overhaul

Saudi Authorities Say Aramco Is Worth More Than $2T

Saudi Arabia has said oil giant Saudi Aramco is worth more than $2 trillion, enough to consume Apple Inc. twice, and still have room for Google parent Alphabet Inc.

The kingdom may have to settle for less. A lot less.

Industry executives, analysts and investors told Bloomberg their analysis -- based on oil reserves and cash flow projections under different tax scenarios -- suggests Aramco is worth no more than half, and maybe as little as a fifth, of that amount. This means Saudi Arabia would earn a fraction of the $100 billion implied by its valuation if it sells 5 percent to the public in 2018, as planned.

https://www.bloomberg.com/news/articles/2017-02-23/saudi-arabia-2-trillion-aramco-vision-runs-into-market-reality

[IsailedawayfromFR]

The lower valuation will likely prevail.  No one that buys in will expect to have its interests reflect the same as similar interests held by the kingdom.  There will always be 'strings' attached, similar to the  'golden share' held by Embraer by the Brazilian govt.

A company run to make a profit is one thing, but anyone buying into Aramco will certainly know that the company will not be run to generate 'profit' but 'income'.  Big difference that will be reflected in the purchase price.