#Saudi #Aramco pares back #IPO to ~25% of initial expectations on weak foreign demand

A billboard advertisement in Jiddah, Saudi Arabia, reads 'Saudi Aramco, soon on the stock exchange' © AP

Saudi Arabia revealed on Sunday that it will seek to raise between $24-$25.6bn from the listing of Saudi Aramco, a fraction of the $100bn it had once hoped for.

Aramco will float just 1.5 per cent of its total shares to investors at price that will value the company at between $1.6tn-$1.7tn. This would still make it the largest listed company in the world — overtaking Apple — but it falls far short of the $2tn valuation sought by Crown Prince Mohammed bin Salman, the kingdom's heir apparent.

...

While Aramco will still court investment from top foreign institutions, it is now paring back its international roadshow, which will no longer include trips to the US or Japan.

The IPO will instead rely heavily on demand from domestic retail investors, as well as Saudi funds, regional investors and other sovereign funds. Saudi officials have visited China and Russia in recent weeks in a bid to underpin demand from countries that have been keen to deepen ties with the oil-rich kingdom.

One banker on the deal said the listing was effectively an IPO in name only after efforts to recruit foreign investors were curtailed. 

...

Foreign institutional interest will be limited to the roughly 1,500 qualified foreign investors already able to trade on the Saudi stock exchange or those nominated by Saudi Aramco or its advisers and approved by the market regulator.

Saudi bankers report plentiful domestic demand for the issuance, with pressure on wealthy families and institutions to apply for allocations of shares at the higher end of the valuation.

...

The bookbuilding process began on Sunday. It ends for retail subscriptions on November 28 and for institutions on December 4. The final price for the shares will be announced on December 5, just as oil ministers from Opec countries meet to decide oil supply policy for the next year.

See the whole article here: 

Saudi Aramco pares back IPO on weak foreign demand https://www.ft.com/content/6a84cf06-090a-11ea-b2d6-9bf4d1957a67

bit.ly/MasterEnergyBlog

#Nigeria hopes to gain extra $1.5bn in #oil revenue from new #Royalties law #OOTT



Nigeria hopes to gain extra $1.5bn in oil revenue from new law

The Nigerian government is under pressure to find sustainable sources of finance. REUTERS/Siphiwe Sibeko

The Nigerian President, Muhammadu Buhari on Monday signed a bill amending the 1993 Deep Offshore and Inland Basin Production Sharing Contract into law from his home in London.[!!!!]

The 1993 law was a series of production and revenue sharing agreements mandating an amendment in the revenue split if oil prices climbed over $20 per barrel.

This new bill adds two revenue streams for the government:

• a flat 10% royalty on all projects over 200 meters deep
• a 7.5% royalty on frontier and inland basins

Last month, Nigeria's federal government claimed multinationals oil companies owed the country around $62bn in revenue, a claim oil companies dispute. Oil companies operating in Nigeria already received requests for cash in February.

But Nigerian oil minister Timipre Sylva does not expect to recoup the $62 billion. "Nobody can bring out that kind of money," he said to reporters after a cabinet meeting in Abuja.

• Sylva urged the government to quickly pass amendments to underlying law to ensure it did not miss out on more revenue.

The Senate passed amendments to the bill on Tuesday last week. This new act gives certain incentives to oil companies operating in the Deep Offshore and Inland Basin areas of the country.

According to the twitter account of the President, "Nigeria will now receive its fair, rightful and equitable share of income from our own natural resources for the first time since 2003".

But experts argue that the increased revenue might cost the government future investments as it is very likely to increase the operating costs of oil and gas companies operating under PSC arrangements.

There are uncertainties for businesses operating in Nigeria and following a recent slump in oil prices this year, a drop in the revenue of the government has led increasing pressure by the governments and its agencies to raise funding to run the country.

• According to the Debt Management Office (DMO), the total external debt stands at $27.16 billion, while Domestic debt climbs to $56.72 billion.

https://www.theafricareport.com/19703/nigeria-hopes-to-gain-extra-1-5bn-in-oil-revenue-from-new-law/?utm_source=newsletter_tar_daily&utm_campaign=newsletter_tar_daily_05_11_2019&utm_medium=email