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Aramco, Oxy, Arsenal

IPO, Proxy Fight, Bankruptcy

Matt Sterett
Nov 12, 2019
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“In 1932, the man who ruled Saudi Arabia from Riyadh had barely a riyal to his name, but Abdul Aziz’s sons, the succeeding rulers of Arabia, would enjoy immense wealth and come to own the most profitable company in the world, Saudi Aramco” -


ARAMCO IPO.

Over the weekend, Aramco filed the prospectus for its upcoming $1TN+ IPO.

Specifically, we found the following interesting / of note:

  • p. 129 - comps to Majors

  • p. 142-147 - Reserves / Production (massive)

  • p. 160-164 - Refining Operations (massive)

  • p. 221-225 - Financial Summary

  • p. 280-283/ 380/451/480-483 - Major Subsidiaries & JVs

  • p. 473, note (f) - looks like there's an error in the document, mentions an upcoming closing date in the past

  • p. 647 - DeMac Reserve Certification Letter (light on data)

Aramco’s upstream assets are relatively well known.

Its other assets were surprising.

Aramco owns Motiva, which includes the largest single site crude oil refinery in North America.

They also own >60% of S-Oil in South Korea, which has an even larger refining capacity than Motiva.

Aramco’s petrochemical / refining operations are massive.

It comes as no surprise that 2/5 independent board members (Peter Cella & Andrew Liveris) are leaders from the refining / chemicals world.

In any event, we’re still skeptical that the IPO gets done before year-end -


IRAN.

“Anywhere you drill a well in Khuzestan, you'll find oil”

Immediately following the Aramco IPO Prospectus, Iran announced the discovery of a massive oil field.

Over 50 billion barrels of crude…

…at a depth of 80 meters…

Recoverable reserves, however, are likely lower than headlines indicate.

It’s no coincidence that the announcement was timed with the Aramco announcement - Iran & Saudi never hesitate to swing at each other when they see an opportunity -


OXY-DARKO.

“The OxyDarko debacle”

In a letter to shareholders, activist investor Carl Icahn has threatened to continue his proxy war with Oxy.

Per Icahn:

“In our view, the Oxy/Anadarko merger made no sense for stockholders, but perhaps it made sense for Vicki Hollub, OXY’s President and CEO, and certain Board members who, we believe, were concerned that OXY would be a takeover target, and therefore grossly overpaid to acquire Anadarko in order to protect themselves and their jobs”

Hyperbole / allegations aside, in the last year, Oxy’s share price has decline 47%.

At the same time, Chevron, the other / failed bidder for Anadarko, is up 1%.

Rasheed Wallace said it best:

“Ball don’t lie”


CHAPTER 22.

For the 2nd time in 10 months, Appalachian natural gas producer Arsenal Energy has filed for Chapter 11 -

Falling gas prices, tightening lending standards, and high transportation costs were blamed.

They could’ve just blamed gas prices, and no one would’ve questioned it.

If the restructuring agreement is approved, lenders Chambers Energy & Mercuria will recap Arsenal with $100MM in new equity -


OTHER NEWS.

  • The Mineral / Royalty names reported - nothing noteworthy, yet

  • Trump nominated a new energy secretary

  • Ithaca Energy (owned by Delek) completed its $2bn acquisition of Chevron North Sea

  • Argentina’s shale industry is bracing for the return of the Peronists

That’s it for today - we’ll be back Friday

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