Saudi Arabia launches share sale at world’s largest oil company

Yesterday, Saudi Arabia’s government began selling some of its shares in state-controlled oil titan Saudi Aramco — a planned offering that could see the country sell just over 0.6% of its 82% direct holding in Aramco, potentially raising as much as $13B by the end of the week.

Pumping profits

Producing more than 9 million barrels of oil per day — or nearly 10% of the world's total — Saudi Aramco is a behemoth that makes the rest of big oil seem almost unworthy of their moniker. Last quarter alone, Aramco generated over $27B in net income, more than western peers ExxonMobil, Chevron, Shell, ConocoPhillips, and BP put together. In fact, since 2020, Aramco has made $460B+... more than even Apple, which has made $384B over that period.

At its current run-rate, raising $13B through a share sale is less than a month-and-a-half worth of profits. So, why sell any of its stake? The answer: the Saudi government has spending plans that are more than a match for its income.

Those plans, often executed through the Kingdom’s high-profile Public Investment Fund (PIF), include the wildly ambitious Vision 2030, a roadmap that seeks to build a 100-mile-long city, a luxury island, a mountain resort, and much more. But, thus far, little work has been completed, with the country scaling back its medium-term ambitions for the development in April. Having originally hoped to have more than 1.5 million people living on “The Line” by 2030, Saudi now expects just 300,000 by the same date. The total estimated bill for the development? Some $1.5 trillion.