Ruud Weijermars^1,, Jonathan Moeller¹

This study analyzes a prime example of corporate restructuring and financial engineering through a detailed analysis of Saudi Aramco's bond and equity financing program which started April 1, 2019. The key steps involved in the ongoing privatization of Aramco, the world’s largest integrated national oil company, via additional major initial public offerings (IPO) in 2021, are explained - including the 2020 acquisition of Saudi Basic Industries Corporation (SABIC). The coupled corporate restructurings of both SABIC and Aramco are visualized in a number of concise diagrams which highlight the impending changes in the appropriation of capital inflows and outflows. The 2020 SABIC acquisition, and 2021 IPO will cause major changes in Aramco’s corporate equity and debt financing, which will be reflected in its financial statements (balance sheet, cash flow account and income statement). We explain what will be the associated accounting shifts and make forward projections for Aramco's financial performance over the next decade, based on certain assumptions of market development and likely debt and equity financing scenarios. Cash flows generated by Aramco for the Saudi Government, before and after the corporate restructuring, are also analyzed in some detail. While the current focus of Aramco’s privatization is on short-term value creation, we argue that the company is also poised for a new global leadership role. The potential impact on the global energy supply system is highlighted, including possible future developments in Aramco’s role as the global oil swing supplier.

cash flow analysis, oil firm privatization, corporate restructuring, debt and equity financing, Aramco