Saudi Aramco announced it has established a Global Medium Term Note Program saying that US dollar-denominated senior unsecured notes may follow.
The notes, if issued, will be admitted to the official list of the United Kingdom Listing Authority and admitted to trading on the London Stock Exchange’s Regulated Market.
The company also indicated in its bond prospectus on Monday Ghawar field, the largest oilfield in the world, had 58 billion barrels of oil equivalent in combined reserves at the end of 2018, and 48.3 billion in liquid reserves.
It said it expected international crude oil prices to remain volatile after the significant fluctuations of recent months.
“Fluctuations in the price at which the company is able to sell crude oil could cause the company’s results of operations and cash flow to vary significantly,” Aramco said.
Aramco's indicated that its debut international bonds have no guarantee from the Saudi government, noting that “the government is under no obligation to extend financial support to the company.”
Figures issued from the state-owned company revealed it made core earnings of $224 billion last year, almost three times as much as Apple and Exxon Mobile.
FitchRatings has released the press release for its first-ever debt rating for the company (A+), including some financial information.
Moody’s estimated that Aramco’s net profit of 2018 reached $111.1 billion.
Rating agencies Fitch and Moody’s rated Aramco A+ and A1 respectively, but both said that without sovereign rating constraints it would be in the same league as oil companies like Exxon Mobil, Chevron, and Shell.
Aramco pays 50 percent of its profit on income tax, plus a sliding royalty scale that starts at 20 percent of the company’s revenue.
Aramco reported cash flow from operations of $121 billion and $35.1 billion in capital spending, and paid $58.2 billion in dividends to the Saudi government in 2018, according to Moody’s.
Bloomberg indicated that state influence on Aramco is strong “Saudi Aramco has an extremely strong liquidity position,” Moody’s said, with $48.8 billion in cash against $27 billion in reported debt.
Fitch’s A+ rating for Aramco is one level below the AA- for both Shell and Total.
The planned bond sale follows the announced acquisition of a 70 percent stake in Saudi Basic Industries Corp (SABIC) from Saudi Arabia’s Public Investment Fund (PIF) in a deal worth $69.1 billion, which Fitch said Aramco planned to pay in installments over 2019-21.
Aramco, the world's largest oil producer by volume, disclosed its financial data to bond investors for the first time on Monday.
Its 2018 liquids production and its total hydrocarbon production averaged 11.6 million and 13.6 million barrels of oil equivalent per day, respectively, well ahead of the upstream output of global and regional integrated producers such as Abu Dhabi National Oil Company, Royal Dutch Shell, Total SA, and BP.
Aramco estimates its proved liquids reserves at 227 billion barrels and its total hydrocarbon reserves at 257 billion barrels of oil equivalent for half a century, a high and comfortable level by international standards, announced Fitch.
“Our conservative forecasts show Saudi Aramco's net debt rising to around USD35 billion by 2021, after incorporating the SABIC transaction,” a statement issued by Fitch indicated.
Aramco's leverage will remain low, even after the recently announced acquisition of SABIC, which Fitch expects to be predominantly funded from the company's free cash flow.
