Saudi Aramco plans to pay $75 billion dividend to lure investors ahead of IPO

Saudi Aramco dividend

Saudi Aramco is planning to pay a base dividend of $75 billion in 2020 in a move meant to attract investors for its Initial Public Offering (IPO). This information was revealed in a corporate overview for investors published on the company’s website on Monday.

The world’s largest crude exporter also plans to change its royalty scheme. In detail, the proposed structure will have a marginal rate set at 15% with Brent crude prices at $70 per barrel. The rate goes up to 45% with Brent prices between $70 and $100, and 80% if the price rises higher. This scheme will come into effect as of January 2020.

Saudi Aramco will be the highest dividend payer

The Initial Public Offering (IPO) is the centerpiece of Crown Prince Mohammed bin Salman’s plan to shake up the Saudi economy and diversify away from oil.

The announced $75 billion dividends would make Saudi Aramco the largest listed dividend payer worldwide.

Furthermore, the kingdom is pressuring rich Saudi families to buy in to the initial public offering, looking to increase the company’s valuation.

The plan to change the royalty scheme was made before a series of attacks against Saudi Arabian oil facilities in September. In fact, it comes just as the Prince Mohammed is trying to accelerate the IPO.

These are the latest measures that the kingdom and the company have introduced to peak investors’ interest.

An energy giant

Saudi Aramco is the world’s largest integrated oil and gas company and produces one of every eight oil barrels produced worldwide.

In 2018, the state-owned company produced 13.6 million barrels of oil equivalent per day, including 10.3 million barrels of crude per day.

Aramco reported a net income of $46.9 billion in the first semester of 2019, down from $35 billion in the same period of 2018. Despite the falling earnings, it continues to be the most profitable company in the world.

In April, it announced its net income amounted to $111.1 billion in 2018.

On September 14, Aramco facilities Abqaiq and Khurais were attacked. This event reduced the nation’s oil output by half. However, it is expected to completely restore production over the following days, according to Saudi Energy Minister Prince Abdulaziz bin Salman.

Yassir Al Rumayyan, head of sovereign wealth fund of the Kingdom of Saudi Arabia, was appointed as the new Chairman of Saudi Aramco in September, replacing former Energy Minister Khalid Al Falih as part of a company restructuring.

Stock market listing

In its overview, Aramco states that its goal is to “reinforce our preeminent position as an oil and chemicals enterprise that operates in a safe, sustainable, and reliable manner.”

The company, the largest oil exporter in the world, is aiming for a $2 trillion valuation in its upcoming stock market listing.

Saudi stock exchange Tadawul is expected to be the main market for Saudi Aramco’s upcoming listing, as the Chairman of the Capital Market Authority (CMA) Mohammed ElKuwaiz told the press on Wednesday.

“The market’s readiness for the listing is our priority, particularly since it is going to be a large listing,” ElKuwaiz told local media.

Reforms of the capital market and economic liberalization are central components of Saudi Arabia’s Vision 2030 diversification plan, as the nation seeks to shed its dependence on oil.

Subsequently, it aims to list in an international exchange, with foreign exchanges like Tokyo, London, Hong Kong, and New York competing to be the selected market.

“The primary listing is going to be locally, but we are also ready to list outside the Kingdom… the decision will be made by the shareholders,” Aramco CEO Amin Nasser told reporters at an energy congress in Abu Dhabi in early September.

For more information, check Energía16

See also: Aramco oil output back to same levels as before the attacks

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