Saudi Aramco Valuation & CN Railway Strike | Weekly News Update

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Aramco IPO Aims to Value Energy Giant at Up to $1.7 Trillion

Saudi Aramco, the Saudi Arabian state-owned oil company, is now aiming for a valuation up to $1.7 trillion, down from the original $2 trillion target for their planned initial public offering (IPO).  If the $1.7 trillion target is met, it will remain the largest IPO ever.  The next largest IPO is Alibaba, which was valued at $169.4 billion in 2014.  The lower valuation target may indicate there are major questions to be answered on the company with the operational, geopolitical, and governance risks that are present.  With the September attacks on Aramco’s oil facilities, it could be a target again with the company going public.

 

Saudi Aramco has proven its worth, as it has reported a profit of $68 billion in the first nine months of 2019.  These profits exceed Apple’s profits – the most profitable public company – but Aramco claims the profits are down 18 percent from last year due to lower oil prices.

Thousands of Canadian National Railway workers go on strike

Canadian National Railway (CN) workers went on strike Tuesday morning, ultimately causing “significant disruption” to service.  This is the first strike for the railway since 2009, which lasted less than a week.  Over 3,000 workers (conductors, yard workers, and other train workers) went on strike due to the Teamsters union and the company not coming to agreement on a new contract, which expired in July.  The teamsters gave a notice on Saturday that if main issues including health and safety were not addressed, a strike would occur.  Surprisingly, wages were not a main focus in the negotiations.  The railway is also dealing with slowing demand, which prompted them to cut roughly 1,600 jobs.

 

CN is the largest rail network in Canada and the fifth largest Class I railway in North America based on operating revenue.  The strike is expected to disrupt 85 percent of the CN network originating in Canada.  Of the 85 percent, 17 percent is moving domestically, 34 percent is exporting overseas, and the other 34 percent is traveling to the U.S.

 

Top Energy Stories

WSJ: Aramco IPO Aims to Value Energy Giant at Up to $1.7 Trillion

Saudi Aramco said it is aiming for a valuation of $1.6 trillion to $1.7 trillion from the planned initial public offering of the state-owned energy company, falling short of the initial $2 trillion targeted by Saudi Crown Prince Mohammed bin Salman in what could still be the world’s biggest-ever IPO.

WSJ: Iran Hands Out Cash, Backs Pro-Regime Rallies in Bid to Stop Violent Protests

Tehran has moved to quell violent unrest sparked by a fuel-price increase by handing out cash stipends to the poor and orchestrating pro-government demonstrations to marshal support for a policy intended to boost the sanctions-hit economy.

Oil Price.com: Fracking Under Fire In California

California Governor Gavin Newsom just dealt a blow to the oil industry, placing a temporary moratorium on new fracking permits in the state until scientists complete an independent review of the practice.

 

Top Freight Transportation Stories

HDT: Nikola, BYD Complete First Emissions-Free Beer Delivery for Anheuser-Busch

Anheuser-Busch, in partnership with Nikola Motor Company and BYD Motors completed a zero-emission beer delivery in the company’s hometown of St. Louis, using Nikola’s hydrogen-electric truck and a BYD electric truck to deliver beer from the local Anheuser-Busch brewery to the Enterprise Center.

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WSJ: Trade Flows Set to Stay Weak, Says WTO

Global flows of goods across borders are on course to grow at the weakest pace since the financial crisis, according to the World Trade Organization, as trade tensions and rising tariffs continue to weigh on exports and imports.

Reuters: Thousands of Canadian National Railway workers go on strike

About 3,000 workers of Canadian National Railway, the country’s largest railroad operator, went on strike on Tuesday, labor union Teamsters Canada said after both parties failed to resolve contract issues.

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Top Economic Stories

 Market Watch: Permits for new-home construction hits post-recession record high in October

Builders started construction on new homes at a pace of 1.314 million in October, the Commerce Department reported Tuesday. While lower than the consensus estimate of 1.325 million starts among economists polled by MarketWatch expectations, housing starts were up 3.8% from a revised 1.266 million in September and 8.5% higher than the same month last year.

Market Watch: Wall Street doubts grow as U.S. and China struggle to finish off ‘skinny’ trade deal

Doubts about a so-called “skinny” deal between the U.S. and China are resurfacing on Wall Street a month after a seeming breakthrough in trade talks helped drive the stock market to fresh all-time highs.

 

This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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