What to Watch

Aramco IPO Stalled Over Indecision on Where to List

Saudi Arabia’s plans for an initial public offering of part of its state-owned oil company, two years in the making, remain on hold amid a debate over where to list the shares, report The Wall Street Journal’s Maurreen Farrell, Summer Said and Benoit Faucon.

Crown Prince Mohammed bin Salman’s desire to list the firm, known as Aramco, on the New York Stock Exchange could open the kingdom up to lawsuits from shareholders and 9/11 victims, external advisers and officials have warned, according to people familiar with the matter. Those officials include Khalid al-Falih, Aramco’s chairman and the country’s energy minister.

“Partly as a result of the differences of opinion, progress on the IPO has stalled, frustrating many of the hundreds of bankers, lawyers and consultants who have been working around the clock for more than a year to prepare the listing,” the reporters note.

Aramco could be valued from $1.3 trillion to $2 trillion. Saudi Arabia has said it plans to list the company sometime this year.

Energy News

Oil Pulls Back After U.S. Rig Count Rises

 An uptick in the number of rigs drilling for oil in the U.S. pushed oil prices lower in Monday morning trade.

There is a strong pick up in rigs, particularly in the Permian region, indicating somewhat of a cap on oil prices,” said Giovanni Staunovo, commodity analyst at UBS Wealth Management, of the ramp up of shale oil drilling in the U.S.

Brent crude, the global benchmark, was down 0.51% at $70.16 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.03% at $66.12 a barrel.

Canada’s Oil Producers Sit Out Rally

 Firm negotiating tactics by Canada’s railway companies are keeping Canadian oil firms from shipping their oil to their primary market in the U.S. and cashing in on the global price rally, report The Wall Street Journal’s Vipal Monga and David George-Cosh.

The rail companies worry that the oil producers will fill their cars with shorter-term contracts and then shift to pipelines when there is a new capacity available in a few years. Pipelines that normally take crude are currently almost at capacity, making rail the only option for big shipments.

Alibaba, Foxconn Invest in Chinese EV Producer

 Alibaba Group Holding Ltd. and Foxconn Technology Group have spearheaded a $348 million funding round into Chinese electric-vehicle manufacturer  Xiaopeng Motors, reports The Wall Street Journal’s Liza Lin.

Venture capital firm IDG Capital was the third lead investor in the funding, which is meant to aid research and production costs, according to Xiaopeng.

WSJ Energy In-Depth

Saudi Aramco Beefs Up Refining Capacity

Saudi Arabia’s state oil company is building an oil-refining empire, a major shift for the world’s No. 1 crude producer as it tries to shore up its balance sheet ahead of the world’s biggest-ever IPO and make up for income lost to OPEC production cuts, reports Christopher Alessi.

The Saudi refining investments were years in the making but were accelerated by 2014’s historic oil-price collapse and the kingdom’s subsequent plan to wean itself off dependence on crude exports for revenue.

The new refining capacity also helps bolster Aramco ahead of its planned initial public offering.

Big Number

5.4 Million

Saudi Arabia’s state-owned oil-giant, known as Aramco, has increased its global refining capacity by more than third, to 5.4 million barrels a day, over the past five years.

FutureCurve

Today: Chatham House in London holds its 2018 energy conference Jan. 29-30. Invited speakers include Claudio Descalzi, CEO of Italy’s Eni, Jabar Ali al-Luaibi the minister of oil for Iraq and Mustafa Sanalla, chairman of the National Oil Corporation of Libya.

Tuesday: The American Petroleum Institute releases its weekly forecast of U.S. oil inventories.

Wednesday: The U.S. Energy Information Administration releases weekly data on U.S. petroleum stockpiles and production figures.

Reporter’s Notebook

Wall Street Journal reporter John Wu on the Chinese oil industry. Though China Oilfield shares have soared 33% this month, Goldman Sachs says that still doesn’t mask the fundamental difficulties facing the offshore drilling-rig market that the investment bank said could last several more years. Singapore-listed peers Keppel and Sembcorp Marine have seen big stock pops this month as well. China Oilfield is one of Goldman’s 7 sell ideas in Asia Pacific. It thinks Cnooc, China Oilfield’s biggest client, will announce below-consensus capital-spending plans at Thursday’s strategy gathering.

Wall Street Journal correspondent Robb Stewart on the Australian energy sector. Morgan Stanley remains bullish on Beach Energy despite a runup in the stock as it moves to close its deal for Origin Energy’s conventional oil-and-gas assets in the coming days. Beach Energy is likely to become the 4th largest listed E&P company by market value in Australia when the deal closes. Morgan Stanley says investors are underestimating Beach’s free cash generation, which is set to help cut debt and will lift equity value over time, while a turnaround of assets in Australia’s Cooper Basin is only just starting. Up 8.2% in January after a 19% jump last year, the shares rose a further 0.8% today.