Saudi Aramco to sell 1.5% stake, valuing company up to $1.7T - Fox Business

OPIS chief oil analyst Tom Kloza discusses Iran's discovery of a new oil field, how large recently discovered oil fields will make 2020 a cheap year for oil, and the possibility of Iran announcing its discovery to undermine the Saudi Aramco IPO.

By JON GAMBRELL and MALAK HARB Associated Press

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DUBAI, United Arab Emirates (AP) — Saudi Arabia's state-owned oil giant Aramco announced Sunday it will sell a 1.5% stake in the company as it looks to raise as much as $25.6 billion from the sale.

The newly released figures also revealed a valuation for the company that's between $1.6 trillion and $1.7 trillion, a figure that fell short of the $2 trillion mark Crown Prince Mohammed bin Salman had sought.

Still, a 1.5% flotation could raise between $24 billion and $25.6 billion to help fuel the Saudi economy. Saudi Aramco announced it will have 200 billion regular shares, selling 1.5% or what is 3 billion shares.

Aramco set a stock price range of 30 to 32 Saudi riyals, or $8 to $8.50 a share for investors.

WITH ARAMCO IPO APPROVAL, CHINA COZIES UP TO SAUDIS

The company is selling 0.5% to individual investors, which will include Saudi citizens, residents of Saudi Arabia and Gulf Arab nationals, and 1% to institutional investors, which could include major Chinese and Russian buyers.

A man walks near a compound for Saudi Aramco in Jiddah, Saudi Arabia, Sunday, Nov. 3, 2019. (AP Photo/Amr Nabil)

Aramco will announce the final price for the stock when the book-building period ends on Dec. 5. Trading on the local Tadawul exchange in Riyadh is expected to happen sometime in mid-December.

The highly anticipated sale of a sliver of the company has been generating global buzz because it could clock in as the world’s biggest initial public offering, surpassing record holder Alibaba whose IPO raised $21.8 billion on its first day of trading in 2014.

Saudi Aramco is the kingdom’s oil and gas producer, pumping more than 10 million barrels of crude oil a day, or some 10% of global demand. The oil and gas company netted profits of $111 billion last year, more than Apple, Royal Dutch Shell and Exxon Mobil combined.

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The kingdom’s plan to sell part of the company is part of a wider economic overhaul aimed at raising new streams of revenue for the oil-dependent country, particularly as oil prices struggle to reach the $75 to $80 price range per barrel analysts say is needed to balance Saudi Arabia’s budget. Brent crude is trading at just over $63 a barrel.

FILE - In this Sept. 20, 2019, file photo, taken during a trip organized by Saudi information ministry, workers fix the damage in Aramco's oil separator at processing facility after the recent Sept. 14 attack in Abqaiq, near Dammam in the Kingdom's E

Prince Mohammed has said listing Aramco is one way for the kingdom to raise capital for the country’s sovereign wealth fund, which would then use that revenue to develop new cities and lucrative projects across Saudi Arabia.

Despite Aramco’s profitability, the state’s control of the company carries a number of risks for investors.

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Two key Aramco processing sites were targeted by rockets and missiles in September, an attack which claimed by Iran-Backed Houthi rebels in neighboring Yemen but which Saudi Arabia blamed on its regional foe Iran. The government also stipulates oil production levels, which directly impacts Aramco’s output.

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Associated Press writer Aya Batrawy in Dubai, United Arab Emirates, contributed to this report.

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2019-11-17 11:41:19Z
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The world's most valuable company: Saudi Arabia puts $1.7 trillion price tag on its oil monopoly - CNN

In a statement Sunday, Saudi Aramco said it was aiming to sell about 1.5% of its 200 billion shares in a partial privatization for between 30 riyals ($8) and 32 riyals ($8.53) each.

That means Aramco, the most profitable company in the world, could be worth between 6 trillion riyals ($1.6 trillion) and 6.4 trillion riyals ($1.7 trillion) — making it also by far the world's most valuable company ahead of Apple (AAPL).

That won't be the only record to fall if Aramco achieves the higher price: at that level, the share sale would raise just over $25 billion, making it slightly bigger than Alibaba's (BABA) 2014 debut on the New York Stock Exchange, so far the world's biggest IPO.

Saudi Arabia is selling shares in Aramco for the first time as part of an economic diversification plan aimed at weaning the kingdom off oil.

Aramco has vast oil reserves and massive daily output. It holds a monopoly in Saudi Arabia, the world's largest exporter of crude. It made $111 billion in profit in 2018, and has promised to pay an annual dividend of $75 billion through 2024.

Crown Prince Mohammed bin Salman had reportedly sought a valuation for Aramco near $2 trillion. But low oil prices, the climate crisis and geopolitical risk have raised skepticism among international investors. Up to 0.5% of the company will be sold to individuals, with the remainder offered to institutional investors.

Aramco may need to heavily rely on rich local families, sympathetic sovereign wealth funds or major customers such as China signing up for shares. Reuters reported Sunday that Aramco will not market the IPO abroad.

The price for the shares will be set on December 5, with trading on the Saudi stock exchange expected to start later that month, according to Aramco's prospectus.

Wall Street's biggest names are advising Saudi Arabia on the privatization, despite pressure from activists who say financing fossil fuel companies will worsen the climate crisis. They have also urged banks not to do business with the kingdom because of its human rights record, including the brutal murder of Washington Post columnist Jamal Khashoggi.

Aramco listed Bank of America (BAC), Goldman Sachs (GS), JPMorgan (JPM), Citigroup (C), Credit Suisse (CS), Morgan Stanley (MS) and HSBC (HBCYF) as joint financial advisers on the transaction. They have all previously declined to comment to CNN Business.

— John Defterios and Julia Horowitz contributed to this article.

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2019-11-17 11:25:00Z
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Saudi Arabia values oil giant Aramco far below original target - Aljazeera.com

Saudi Aramco has set a price range for its listing that implies the oil giant is worth between $1.6 trillion to $1.7 trillion, below the two trillion dollars the Saudi Arabian crown prince had targeted but still making it potentially the world's biggest initial public offering.

Aramco said on Sunday it plans to sell 1.5 percent of its shares or about three billion shares, at an indicative price range of 30 riyals ($8.00) to 32 riyals ($8.53) each - valuing the IPO at as much as 96 billion riyals ($25.60bn) at the top end of the range.

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If priced at the top, the deal could just beat the record-breaking $25bn raised by Chinese e-commerce giant Alibaba in its stock market debut in New York in 2014.

Aramco's float is the centrepiece of Crown Prince Mohammed bin Salman's plan to diversify the world's top crude exporter away from oil.

Aramco does not plan to market its domestic IPO abroad, three people familiar with the matter said, which suggests international roadshows will not take place.

"This will put the burden of the deal on local and regional banks," one of the three people said.

"This means most of the investors will participate as Qualified Foreign Investors in a Saudi transaction," another one of the people said.

Aramco finally kicked off its IPO on November 3 after a series of false starts. Crown Prince Mohammed, who had floated the idea of the listing four years ago, is seeking to raise billions of dollars through the deal to invest in non-oil industries and generate employment.

But the investment world is still trying to decide what the famously secretive company is worth. Analysts from banks working on the Riyadh bourse had projected a wide valuation range for Aramco of between $1.2 trillion to $2.3 trillion.

On one hand, Aramco is the world's most profitable company with a planned dividend of $75bn next year, more than five times greater than Apple's payout, which is already the biggest of any S&P 500 company.

On the other, it is a bet on the price of oil at a time when global demand is expected to slow from 2025 as measures to cut greenhouse gas emissions are rolled out and the use of electric vehicles increases.

Risky bet?

The deal is also rife with political risk, as the Saudi government - which relies on Aramco for the bulk of its funding - will continue to control the company. Prince Mohammed's reputation was tarnished by the murder of Saudi journalist Jamal Khashoggi last year.

In addition, Aramco's oil plants were targeted on September 14 in attacks which initially halved its output. The firm has said the strikes would not have a material impact on its business.

The share sale is expected to be a huge hit among Saudi citizens who are being offered 0.5 percent of the company.

Al Jazeera's Economics Editor, Abid Ali, says many of the country's billionaires, some of whom were detained by Saudi authorities in Riyadh's Ritz Carlton hotel in a 2017 anti-corruption crackdown, are likely to also be big investors when the shares are sold.

"On that level, it will be a success, because on the day that the shares will be sold, the Saudi pension funds, investment funds, will pick up any of the stock that's left over," Ali said. 

But, he says, international investors are staying away.

"There are different ways to value Saudi Aramco. There's use of the oil price, free cash flow, and dividends. And on most of these measures, the maths just did not stack up. And many international investors didn't fancy being a passenger in a car that's being driven by the Saudi authorities," he added.

Retail investors have until November 28 to sign up for the IPO while institutional investors can subscribe until December 4, with company management going on marketing roadshows this week.

The Aramco listing means a year-end rush for equity markets with Alibaba currently taking orders for a Hong Kong listing that is expected to raise up to $13.4bn for the online retailer.

The Riyadh listing comes after initial hopes for a five percent IPO on the domestic and international bourses were dashed last year amid debate over-valuation and where to list Aramco overseas.

Aramco said the IPO timetable was delayed because it began a process to acquire a 70 percent stake in petrochemicals maker Saudi Basic Industries Corp.

SOURCE: Al Jazeera and news agencies

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2019-11-17 09:49:00Z
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Fans Getting Charged Up To See Ford's New Electric Mustang SUV - NPR

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Ford's Mustang Mach-E will be unveiled Sunday. It's part of the Detroit-based company's $11 billion investment in electric cars. Ford hide caption

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Ford

The Mustang — one of the most quintessentially American cars — is about to kick off a new chapter. After years of secrecy, Ford is unveiling the Mustang Mach-E, an electric SUV "inspired" by the classic car's key design elements.

The big reveal is happening Sunday in Los Angeles, days ahead of the annual auto show there.

The Detroit-based company's classic hush-hush marketing strategy has had fans of the iconic car scouring the Internet for clues about how it will look and drive. And, on Thursday night, they hit the mother lode. Or at least, it's possible they hit it.

For a brief window, someone at Ford published the SUV's reservations website, complete with photos, specs and pricing. But the site was quickly taken down and Ford has not confirmed any of the details that it contained, which seems top have fanned the flames for eager fans.

Among them, is Gary Hankins, who said he's been trying to piece together bits of information about the car for the last two years — an admirable feat considering he didn't even know the name of the car until this week.

All Ford is officially saying for now is that the SUV will be on the market in late 2020 — part of the company's $11 billion investment in electric cars. The automaker also says the estimated range of the SUV will be a whopping 300 miles on a single charge.

That was enough to make Hankins, a retired D.C. cop, "go absolutely gaga," according to his friends. For Hankins, the fact that it'll look a little like a Mustang is "really icing on the cake."

Finally owning a car with the Mustang named attached would be the fulfillment of a teenage dream.

"I was in high school in the '60s when the Mustang came out," he recalled wistfully. "I would love to have had a Mustang. [I] couldn't afford one."

More than five decades later, Hankins is thrilled he's got a lot more money in the bank. "Here I am, now 71 years old, I'm finally getting my Mustang," he said.

Hankins is angling to get on a pre-order list for the teched-out pony car, which Ford says he'll be able to do as early as Sunday night.

The only official peek of what the SUV will look like, is a vague swooping blue drawing on Ford's website. But, Thursday's leaked photos along with others captured by eagle-eyed enthusiasts last week, show it's a fairly compact and sporty version of an SUV.

Car designer Camilo Pardo is a skeptical of attaching the Mustang name to an SUV. "If an SUV could speak, the first thing it would say is, I want to be a Mustang," he said and laughed.

Pardo, the former head of Ford's Living Legends studio and the chief designer of Ford's GT, says hardcore Mustang fans should manage expectations when it comes to any family friendly crossover. But he suspects the reimagined version will possess three essential iconic elements.

First, it's got to have the big grill, which "is supposed to look intimidating."

"Like it's out to get you," he said.

Second, he said, the headlamps have to have the trademark "frowny" shape that give it "the personality of an angry animal."

Finally, it has to have the unmistakable taillights. Pardo said experimenting with those has always been a fun thing for designers. The challenge is figuring out how to modernize the three little bars the Mustang is known for.

Gail Wise is widely recognized as the first person to buy a Mustang in the U.S. She got hers on April 15, 1964, two days before it debuted at New York's World Fair. Courtesy of Gail Wise hide caption

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Courtesy of Gail Wise

Based on the sales track record of most electric cars, it's unlikely this Ford model will prove as popular as the 1964 original. That had one of the most successful product launches in American history.

Gail Wise remembers the frenzy around the campaign, which much like today's was shrouded in mystery. "Ford had not shown the car on TV. They only advertised the logo," she recalled.

Wise is widely recognized as the first person in the U.S. to buy the car. She was 22 and wanted a convertible. The salesman said he had just the car.

He walked Wise, and her parents, past all of the cars on the showroom floor saying he had something special to show her.

"And in the back room, under a tarp, was a skylight blue Mustang and I was like, wow, that's for me," she said.

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Gail Wise sits in her 1964 Mustang as Ford celebrates the production of the 10 millionth Mustang at in August 2018. Jeff Kowalsky/AFP via Getty Images hide caption

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Jeff Kowalsky/AFP via Getty Images

It was April 15, 1964, two days before the car debuted at the New York World's Fair. The salesman wasn't supposed to sell it. But he did. It cost $3,447.50.

Fifty-five years later, Wise still has the skylight blue beauty. (Her husband Tom fully restored the car as a retirement project.)

Wise says she knows she's biased, but she wonders if being Mustang "inspired" will be enough to make Ford's new venture an icon, too.

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2019-11-16 13:01:00Z
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Under Armour reportedly borrowed business from future quarters in 2016 to hide slowing demand - CNBC

An Under Armour store front is seen on November 04, 2019 in Sunrise, Florida.

Joe Raedle | Getty Images

Under Armour borrowed business from future quarters to hide slowing demand in 2016, the Wall Street Journal reported Thursday.

The Department of Justice and Securities and Exchange Commission have been investigating the Baltimore-based company over its accounting practices. The two investigations were confirmed by Under Armour in early November, but the company has said that it has been cooperating with investigators since July 2017.

In 2016, Under Armour leaned on retailers to take goods early, former executives in sales, logistics, merchandising and finance told the Journal. Sportswear intended for factory stores would be sent to off-price chains in order to book sales in the final days of a quarter, according to the Journal.

Some of the executives told the Journal that such moves were common in the retail industry.

A person familiar with the matter told the Journal that federal investigators are examining emails that show that Under Armour's founder and CEO Kevin Plank knew about the efforts. Plank is stepping down as chief executive Jan. 1, but will remain with the company as executive chairman. President and Chief Operating Officer Patrik Frisk will replace him as CEO.

Under Armour said in a statement that the ongoing investigation constrains the company from addressing every allegation in the media. Under Armour's management and board of directors stand by its financial reporting, the company said.

The statement said, in part, "In this respect, our process for recognizing revenue and recording returns and other allowances has not changed and has always been in compliance with generally accepted accounting principles."

Under Armour shares were down less than 1% in premarket trading Friday. The stock has fallen 3% since the start of the year. It has a market value of $7.7 billion.

Here's the full statement from Under Armour:

We are aware of recent media coverage concerning Under Armour's business practices. As we have stated previously, we firmly believe that our disclosures and our accounting practices have been entirely appropriate. Our management and board of directors have reviewed this matter extensively over the past two and a half years and stand by the Company's financial reporting. Because the investigation is ongoing, we are constrained in our response and cannot address every allegation raised in the media or by anonymous sources cited in the news.

When Under Armour speaks, we always communicate our best understanding as to the market and the Company's prospects. For many years, quarterly shifts in wholesale revenue related to timing of shipments based on financial goals; customer requests; year-to-year seasonal variance; different fiscal calendar alignments; product availability; logistics; and numerous other dynamics have been, and continue to be, part of the normal course of business practices in the apparel, footwear and retail sector. In this respect, our process for recognizing revenue and recording returns and other allowances has not changed and has always been in compliance with generally accepted accounting principles. Indeed, as reported by certain media outlets, analysts and accounting experts agree that such end-of-quarter practices are generally permitted under accounting rules.

Under Armour has become one of the world's largest athletic performance brands through industry-defining innovation, ambitious and driven leadership, and a culture that holds itself to the highest standards of integrity including operating within standard industry business practices and always in compliance with generally accepted accounting principles.

Read the Wall Street Journal's full story here.

-- CNBC's Lauren Thomas contributed to this report.

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2019-11-15 13:15:00Z
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FDA issues warning to Dollar Tree about selling ‘potentially unsafe drugs’ - WJW FOX 8 News Cleveland

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FDA issues warning to Dollar Tree about selling ‘potentially unsafe drugs’  WJW FOX 8 News ClevelandView full coverage on Google News
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2019-11-15 11:44:00Z
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The U.S. Natural Gas Boom Is Fueling A Global Plastics Boom - NPR

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Kevin Ross, president of the Scottish Plastic and Rubber Association, in front of the INEOS Grangemouth refinery and chemical plant. Reid Frazier/The Allegheny Front hide caption

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On a quiet street overlooking Scotland's largest refinery and chemical plant, Kevin Ross surveys the newest outgrowth of the American oil and gas boom.

Since 2016, natural gas from the U.S. has been feeding the Grangemouth petrochemical plant, a vast complex of cooling towers, flaring towers and pipelines. The gas is originally harvested in Western Pennsylvania, sent through a pipeline to Philadelphia, and put on ships across the Atlantic.

"It comes here, is taken off the ships, put into large storage tanks," explains Ross, who's president of the Scottish Plastics and Rubber Association and runs a local plastics testing company.

Natural gas is mostly used for heating homes or fueling power plants. But when it comes out of the ground it contains another key ingredient — ethane, a building block of plastics — and that is now fueling another booming industry.

America is producing so much ethane that over 300 new petrochemical and plastics plants are either planned or under construction around the country. President Trump has touted the economic benefits of this, recently telling workers at a Shell ethane plant in Pennsylvania that "we are reclaiming our noble heritage as a nation of builders."

But there's more ethane than existing U.S. plants can use, so in short order the U.S. has also become the world's leading exporter of ethane. That's feeding growing plastics industries in India and China, as well as Europe — including the Grangemouth plant — and those exports are expected to keep growing.

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American shale gas is "driving investment decisions"

America's ethane boom was a lucky break for the European chemical company INEOS. In 2011, its own supplies from the North Sea were running low, says Warren Wilczewski, an economist with the U.S. Energy Information Administration.

"INEOS looked at the United States, where ethane supply was growing, and especially in the Appalachian region, that ethane had, like, no place to go," Wilczewski says. "And they recognized an opportunity."

INEOS commissioned a fleet of ships, the first ever to carry ethane by sea, to move the gas from a port near Philadelphia to plants in the U.K. and Norway.

It also signed a deal with Sunoco Logistics to ship that gas from Western Pennsylvania through the Mariner East pipeline. Sunoco's construction on that has been controversial because of its spotty environmental record and use of eminent domain. It's the subject of criminal investigations, including one by the FBI. But the pipeline has proved vital for INEOS' plan.

Ross, of the Scottish Plastics and Rubber Association, says the arrival of Pennsylvania shale gas has allowed the company to re-open a unit of the Grangemouth petrochemical plant that had been shut down for years; the plant is now operating at full production.

"I can't underestimate the importance of the American shale gas and the feedstock costs for INEOS," Ross says. "It is driving investment decisions into Grangemouth which wouldn't have been made if it wasn't for the availability of the shale gas."

INEOS did not agree to an interview for this story. But in a company video, CEO Jim Ratcliffe said the cost of ethane from Pennsylvania was about one-fourth of what he would have had to pay for it in Europe.

"I think for some of these [chemical plants] in Europe it's the only way they can survive, if we can bring some of the U.S. economics across to Europe," Ratcliffe said.

Pushback to fracking's "toxic element"

Plastics and petrochemicals are increasingly important to the oil and gas industry. They're expected to account for more than a third of growth in world oil demand by 2030, and half of all growth by 2050, according to the International Energy Agency. This worries environmentalists, who point out that the plastics industry accounts for around 4% of all carbon emissions, and that number is expected to increase.

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Much of the growth in plastics will be in Asia, where millions of people will be moving into the middle class in the next few decades, says Jennifer Van Dinter, an analyst at S&P Global Platts.

"If you're adding plumbing to a home, you're going to use PVC pipe," she says. "You might be using insulation, which is going to be derived from petrochemicals." She says more people also will be buying cars, and even if it's an electric model, "there's a lot of plastic components."

In Scotland, INEOS got over $350 million in loan guarantees from the U.K. to retrofit the Grangemouth plant for American shale gas. But the company also wants a local supply, and it's pushed for the U.K. to allow fracking. That's the controversial technology that breaks up rock deep underground to get hard-to-reach oil and natural gas, and which has made America's gas boom possible.

The idea was met by intense opposition.

Norman Philip, with Friends of the Earth Scotland, grew up in Grangemouth, where his father worked at the plant under a previous owner. But he opposes fracking because of what he's heard about it from communities in the U.S. and Australia.

"People were telling us of gas leaks. They were telling us of, like, children having headaches," he says. "There was a toxic element of it."

The pushback has resulted in an ironic twist: in 2015 Scotland put in place in moratorium on fracking, and the U.K. government recently did the same. And yet, it's still legal to import shale gas produced by fracking in the U.S.

Lee Sinclair is a railroad engineer at the Grangemouth petrochemical plant and has mixed feelings about that. "The only thing I don't like about it is, Scotland said, 'No you're not fracking here,' so they decided to go to America to get this gas," Sinclair says.

He'd rather the U.K. get its own local supply. But for now, he says, America's boom in gas and ethane is helping him keep his job.

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https://www.npr.org/2019/11/15/778665357/the-u-s-natural-gas-boom-is-fueling-a-global-plastics-boom

2019-11-15 10:00:00Z
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