And it matters because this is oil, and we all know that the world’s oil reserves cannot be burned or, quite literally, there is no future for life on earth. And yet this flotation assumes we can: the value is in the reserves.
It is one of the largest companies in the world by revenue, and according to accounts seen by Bloomberg News, the most profitable company in the world. Saudi Aramco has both the world’s second-largest proven crude oil reserves, at more than 270 billion barrels (4.3×1010 m3), and second-largest daily oil production.
Saudi officials have backed an official figure of $2 trillion for Saudi Aramco’s value. The company’s financial data were leaked in April 2018, and according to Bloomberg’s analysts the company could be valued at $1.2 trillion, a significantly lower sum.
If we take the Saudi number that values each barrel of reserve at $7.50. Current Brent is around $62.00.
So, we’re not valuing Aramco at the value of reserves, are we?
On Wednesday, 12 June 2019, Aramco has reported its net income at $111.1 billion in 2018 compared to $75.9 billion in 2017, this with total revenues at $355.9 billion in 2018. By first half of 2019, Aramco reported a net income of $46.9 billion.
Hmm. $50 billion in profits for a half year. So, mebbe $100 billion for a full. That’s a 5% return on $2 trillion valuation, isn’t it?
You know, we might be valuing Aramco on the profits it makes, not reserves.
Gosh, you mean the professor emeritus of practice in international political economy at Islington Technical College knows fuck all? We are surprised.
Never was there a more obvious conflict between the failing logic of the market and future we need.
We might perhaps worry more about the gap between knowledge and commentary……