David Lennox, Fat Prophets, Energy News, ET EnergyWorld

New Delhi: We are not going much more upside on Saudi Aramco stock as we see the stock trading on the floor, says David Lennox, resource analyst, Fat Prophets. Excerpts from an interview with ETNOW.

It is a historic listing. Saudi Aramco has surpassed Apple to become the most valuable company as well. The big question is what kind of an appetite will the market have for listings like this?
From pre-listing, it has already been said that there is going to be a slight premium inside the share price when it finally lists and that is probably indicative, more so of the dividend yield that one can make out of the stock, rather than perhaps the actual valuation. We think that we are not going much more upside once we see the stock price trading on the floor.

This will definitely become a crude play as well. So, every time one wants to bet on crude, one can look at this stock as well?
Well look no doubt, being the biggest single producer of 10 million barrels of oil roughly. We believe that if you want to play on the oil price, you will get a good lead because it is going to be a very low cost producer and that gives it the leverage to any increase in oil price if you want to have exposure through a company.

What does this mean for global crude suppliers?
We know that Saudi Arabia wants to move away from being oil market based. This may be the first step in terms of moving away from oil and putting money in other sectors of the market or enterprises.

What is your perspective on crude prices overall?
At this stage, we are confident that we will see a higher crude price in 2020. We do not think it is going to be significantly higher. Brent range for the 2020 year-end is US $70-75 a barrel. We are not far away from that level at the moment. We expect to see OPEC maintain its production levels with the recently announced cuts and we do expect to see demand. However, this is where the equation gets a little difficult to remain around a 100 million barrels going through 2020. If that is the case, we expect oil price to remain quite subdued but on the positive side.

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