Saudi Aramco, the world's largest oil company, took another step on its long road to a stock exchange listing on Saturday, saying it would announce a final price for the shares on December 5, with trading expected to start in mid-December.
The company's 658-page prospectus was issued a week after Aramco formally announced plans to sell shares on the local Saudi stock exchange, known as Tadawul.
The first offer from Aramco, probably the world's most profitable company, could be the largest ever, surpassing the nearly $ 22 billion that Alibaba, the Chinese e-commerce giant, collected in 201
The document did not specify the total percentage of company it would sell. While saying that up to 0.5 percent of the company's shares would be sold to individual investors, the percentage of institutional investors, which may include oil companies from China and other countries, will be determined by whether the prince and his advisers can enter into agreements with them.
The Prince originally said the company would be valued at around $ 2 trillion. Some analysts are now skeptical of that valuation. Bernstein, a Wall Street research firm, on Monday pegged the company's value to $ 1.2 trillion to $ 1.5 trillion. The prince had also said the stock would trade on a prestigious international stock exchange such as New York or London, but such a listing has been postponed, with some analysts questioning if it will ever happen.
There are also deeper concerns about the extent to which the interests of new investors in the company will be protected. With only a small percentage of the company's shares likely to be traded, the Saudi government will remain by far the largest shareholder, and according to analysts, they can do much as they would with an organization that generates large portions of government revenue.
Geoffrey Heal, professor of energy economics at Columbia Business School, said that potential investors had to weigh the trade-offs between Aramco's huge, cheap oil resources and questions about how the company could be managed in the future.  "There's a lot of oil there, and it's high quality oil," he said, "but everything else is pretty negative with this."
Mr. Heal said that Aramco faced many risks, including the geopolitical dangers in the Middle East, demonstrated by the September air strikes at two major Aramco production plants, and the potential for declining oil demand due to climate change concerns.
The prospectus recognizes that “terrorism and armed conflict can significantly and negatively affect Aramco and its stock price in the future.
The prospectus describes a number of recent attacks, including those in September, and concludes that others may have a serious impact on the company's "business, financial position and operating results" as well as discourage investors from buying the shares.
The company also acknowledged that oil demand growth has been slower than global economic growth in recent years due to factors such as gains in fuel efficiency and the rise of alternative energy sources such as wind and solar and electric vehicles.
Growth in oil demand is likely to level off by 2035, according to the document, but it adds that the market share of low-cost producers such as Saudi Arabia is likely to increase. The kingdom, the document forecasts, is likely to produce increasing amounts of oil by 2050.
For investors, Heal said, the most immediate threat could be increasing oil supplies. An increase in oil supplies from the United States as well as other producers such as Brazil, Canada, Norway and Guyana could cause prices to fall. In that case, the company may struggle to earn enough profits to pay a significant dividend of $ 75 billion a year as promised by investors.
"Profits can be lower than we think," Heal said.
In the prospectus, Aramco stated that the company "is committed to delivering sustainable and growing dividends to its shareholders" through the ups and downs of oil prices. The company even states that the government is willing to waive part of the dividend so that non-state shareholders receive payments based on a total of $ 75 billion.
Aramco has continued to feel the effect of lower oil prices this year. Already, revenues for the first nine months of 2019 are 18 per cent lower than in the same period one year ago. Lower production and the disruption caused by the September attacks probably also played a role.
Stuart Joyner, an analyst at Redburn, a market research firm, said that in some respects Aramco is not managed as BP or Royal Dutch Shell, which, he said, produces the oil they can to make as much money as possible for shareholders .
Instead, the Saudi government has in recent years thrown back Aramco's production as part of a coordinated effort with OPEC and other manufacturers, including Russia, to support prices.
But now that it will be outside investors, "it creates a conflict of interest and uncertainty in governance at the heart of this company," Joyner said.