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Saudi Aramco Got Its Maiden Credit Rating

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Saudi Aramco’s credit rating

Saudi Arabian Oil Company, also known as “Saudi Aramco,” is a state-run integrated energy giant in Saudi Arabia. Saudi Aramco was rated for the first time by Fitch and Moody’s. Fitch issued an “A+” rating with a stable outlook for the company’s IDR. Moody’s assigned an “A1” rating with a stable outlook.

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The ratings came before the company’s first inning in the international capital markets. Saudi Aramco plans to raise ~$10 billion in a bond issue. The company plans to buy the government’s 70% interest in SABIC for $69.1 billion. SABIC is a large global chemicals producer. The company is expected to create an integrated value chain for Saudi Aramco.

Fitch stated that Saudi Aramco’s standalone credit profile corresponds to an “AA+” rating. Saudi Aramco has vast hydrocarbon reserves, massive production, and a comfortable debt and liquidity position. In 2018, the company had $48.8 billion in cash compared to the total debt of $27.0 billion on its balance sheet.

Fitch’s ratings for Royal Dutch Shell (RDS.A), Total (TOT), and BP (BP) are “AA-,” “AA-,” and “A” with a stable outlook.

Massive hydrocarbon production and reserves

Saudi Aramco is the largest hydrocarbon producer in the world. The company produced 13.6 MMboed (million barrels of oil equivalent per day) in 2018. ExxonMobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS.A), and BP (BP) produced 3.8 MMboed, 2.9 MMboed, 3.7 MMboed, and 2.5 MMboed.

Saudi Aramco’s proved reserves are 257 Bboe (billion barrels of oil equivalent), which equals a comfortable 52-year reserve life. The number shows Saudi Aramco’s size compared to listed integrated energy companies. Saudi Aramco’s total proved reserves are also more than 10x ExxonMobil’s total proved reserves, which stood at 24.2 Bboe. Chevron’s total proved reserves stood at 12.0 Bboe in 2018.

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