Saudi Aramco steps up investor push with $75bn dividend plans
Saudi Arabia's state oil giant Saudi Aramco has boosted efforts to woo investors with plans to pay out a total annual dividend of $75bn as it prepares for an initial public offering (IPO).
Aramco has been courting investors by also planning to change state royalty payments and cut corporation tax for the IPO as it seeks to achieve a $2trn valuation.
The state-run company, which produces about 10% of the world's oil, plans to announce its intention to float later this month with the aim of selling shares on the Riyadh stock exchange as soon as November. The IPO is the centrepiece the crown prince's plans to revamp the Saudi economy and will release billions in capital for the kingdom's sovereign wealth fund.
Dividends of $75bn would give investors a yield of 3.75% if the company achieves its ambitions of a $2trn valuation. Although $1trn-$1.5trn is deemed a more realistic price for the world's most profitable company, advisers have been aiming for a higher figure to placate crown prince Mohammed bin Salman.
The 2020 payment is part of plan for a growing, progressive dividend to investors, according to a corporate presentation posted on the company's website on Monday. The document also mentioned the company's "progressive royalty scheme", with a marginal rate set at 15% up to $70 per barrel, 45% between $70 and $100, and 80% if the price rises higher.
The IPO appears to be proceeding despite uncertainty over the timeline following a Sept. 14 attack on Aramco's facilities.
Saudi Aramco restored production to pre-attack levels following the strikes on its facilities, which cut off half of its supply and caused oil prices to spike, according to the chief executive of the company's trading unit.
"On production, we're keeping at 9.7 million bpd. We've reached the same level we were pre-attacks," Ibrahim Al Buainain said on the sidelines of a conference in Fujairah.
The attacks last month hit at the heart of the Saudi energy landscape, targeting an oil processing facility - the world's largest - as well as an oilfield in the Eastern Province, taking out 5.7 million bpd or 5% of global supply.
The world's largest oil exporter tapped its inventories to meet customer obligations following the incidents. "Not one single shipment to any Saudi Aramco customer was missed or cancelled as a result of that," said Al Buainain.
News of the investor payouts came the day after prince Mohammed warned that oil prices could skyrocket to "unimaginably high numbers" due to tensions with Iran. In an interview with CBS on Sunday evening, he predicted that war between the two countries would lead to "a total collapse of the global economy".
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