Yet again the float of oil and gas titan Saudi Aramco, which was scheduled to get underway in November, has been delayed indefinitely.

As is often the case with an IPO the debate is over valuation with investors not buying the argument that the world’s largest oil company should be valued at $2tn.

A plan to pay an annual dividend of $75bn in 2020 would translate as a 3.8% yield at that valuation. Which doesn’t sound too stingy in isolation but is a long way short of the amount of cash being returned to shareholders by other major oil companies.

In the UK, for example, BP (BP.) and Royal Dutch Shell (RDSB) pay yields of 6.6% and 6.8% respectively.

And arguably a state oil firm like Saudi Aramco should trade at a discount to reflect the corporate governance risks associated with possible government interference not to mention the bubbling geo-political tensions in the Middle East.

The failure of Aramco thus far to get its listing out the door is also a potential barometer of sentiment towards the wider oil and gas sector.

The industry is both beset by concerns over global growth prospects as well as increasing political and civic pressure over climate change.

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Issue Date: 22 Oct 2019