Aramco Hires Evercore for Gas Spinoff Valued Above $100 Billion

Summary

• Bloomberg says Aramco hired Evercore to advise on carving out a standalone gas division.
• Boston Consulting Group advised the split under an internal effort code-named Project Gamma.
• A listing could value the gas business at more than $100 billion, the report said.

The latest

Saudi Aramco has brought in investment bank Evercore to advise on a restructuring that would create a standalone gas division and open the door to a future listing, Bloomberg News reported Saturday, citing people familiar with the matter. Boston Consulting Group separately advised the world's largest energy company to split off its gas operations. A minority listing or IPO could value the unit above $100 billion.

Details

• The advisers: Bloomberg reported that Evercore was hired to advise on the restructuring, while Boston Consulting Group recommended separating the gas operations. Neither firm, nor Aramco, responded immediately to Reuters' request for comment outside business hours, Reuters said.
• The code name: The separation effort is internally labeled "Project Gamma", according to Bloomberg, and is framed as a way to unlock more value from assets currently sitting inside Aramco's wider portfolio. The report did not set out a timetable for completing the restructuring.
• The valuation: A carve-out could draw fresh investment into the gas business or lead to an initial public offering or minority listing valuing it at more than $100 billion, Bloomberg reported. It is the first valuation figure attached publicly to the unit since the restructuring plan surfaced.
• The earlier report: Reuters reported earlier in the week that Aramco plans to reorganize its business around a new gas division, giving it a focused platform to develop natural gas resources at home and build a liquefied natural gas portfolio abroad. Saturday's report adds the advisers and the price tag.
• The Gulf template: According to Reuters, the move tracks an established strategy among Gulf state oil companies: selling outside investors stakes in parts of the business while keeping operational control and leaving core oil-producing divisions largely closed to external ownership.
• The fiscal driver: Aramco has been seeking outside capital to help fund Saudi Arabia's diversification agenda under mounting fiscal pressure, Reuters reported. The company has been actively selling assets, improving efficiency and cutting costs across its operations.
• The sourcing chain: The restructuring details were reported by Bloomberg News citing people familiar with the matter, and subsequently carried by Reuters. No Aramco executive has publicly confirmed the hiring of Evercore or the Project Gamma designation.
• What stays untouched: The reported plan concerns the gas business only. Aramco's crude production operations, the core of its revenue and the centerpiece of its 2019 listing, are not part of the separation described in the report.

Background

Aramco listed a small slice of itself in 2019 in what was then the largest IPO on record. Since then the company has leaned on asset sales and stake disposals to raise capital, while Riyadh has pushed to expand domestic gas output and enter global LNG markets.

Between the lines

The sequencing matters. A week ago the story was a corporate reorganization; naming Evercore, BCG and a nine-figure valuation turns it into a capital-raising exercise with a price attached. Keeping the carve-out to gas while leaving crude untouched follows the Gulf pattern Reuters described — monetize the periphery, hold the core. No timetable has been disclosed, which leaves the listing an option rather than a commitment.

What's next

Watch for an Aramco statement confirming or denying the Evercore mandate, any formal board approval of the gas division, and whether the company attaches a listing venue or timeline at its next results disclosure.

Source: Reuters, Bloomberg News