Updates
April 8, 2019: in the original post I wrote that I assumed Saudi Arabia could increase the size of its bond sale. Apparently it did:
Original Post
Before we get started, my two cents: the budget requirements for the Kingdom of Saudi Arabia is more important / more relevant than the "true" breakeven price.
From oilprice. Datapoints:
- Aramco information becoming available after the company's bond offering this past week; bond offering --
- $30 billion demand
- proposed offering: $10 billion
- one assumes they increase the size of the offering
- data from the bond filing
- Aramco, 2018, world's most profitable company
- earnings: $111 billion
- revenue: $356 billion
- free cash flow: $76 billion
- Brent averaged $71.34/bbl
- Apple, second most profitable: $$60 billion
- ExxonMobil: $21 billion
- but note: Saudi Aramco struggled to break even in 2016 when Brent crude averaged about $45 / bbl
- net income: $13 billion
- free cash flow: $2 billion
- conclusion: Aramco's breakeven price is just about $40/bbl
- this author called OPEC's 2016 to open the spigot a "trillion dollar miscalculation"
- I called it a "trillion dollar mistake"
- author's bottom line: "we will likely never again see an extended period of time with world oil prices below $45, because OPEC will have to take action at that point to prop up prices as the cartel did in 2016
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