Valuing Saudi Aramco

Synopsis

Recent news indicates that the Saudis are considering selling shares in Saudi state-owned oil company Saudi Aramco. This potential sale raises questions about how to accurately value such a massive and intricate company. Saudi Aramco holds approximately 260 billion barrels of oil equivalent and an additional 40 billion in natural gas reserves. Comparisons are made to other state-owned oil companies like Pemex and Rosneft, which provide context for valuation. Analysts suggest that the value of the reserves could be around eight to ten dollars per barrel, leading to an estimated total company value of approximately 2.4 to 2.5 trillion dollars. This valuation is significantly higher than Exxon Mobil, the largest publicly traded oil company, which has a market cap of about 300 billion dollars. The challenge remains whether any exchange can accommodate even a fraction of Saudi Aramco's equity, given that the Saudi market capitalization is less than 400 billion dollars.