If you want to better understand the potential hazards facing oil investing, let’s spend a little time reviewing the years-delayed IPO planned by Aramco, the Saudi state-owned oil giant. Though the Aramco IPO is finally appearing imminent and is expected to be the largest-ever initial public offering, it has been riddled with problems tied to the oil business’s vulnerability.
Granted, few if any high-net-worth investors will get access to Aramco shares, and yet the whole oily mess is rich with lessons for energy investors of all scale.
Consider that despite being by far the world’s largest oil producer and exporter, as well as the most profitable company on the planet, Aramco’s command over its financial fate has been shaky. The Saudi government expects $2 trillion in IPO proceeds in return for a 1.5 percent sliver of the company, but analysts are on record predicting Aramco will be lucky to raise capital at a $1.5 trillion valuation. Understandably, analysts a