Saudi Aramco, the world’s largest oil company, took another step on its lengthy path to a stock market listing on Saturday, saying that it would announce a final price for its shares on Dec. 5, with trading expected to start in mid-December.
The company announced last week that it planned to list on the local Saudi stock exchange known as the Tadawul.
Aramco may wind up being the largest initial public offering ever, exceeding the nearly $22 billion raised by Alibaba, the Chinese e-commerce giant, in 2014, but it still may fall short of the expectations raised by Crown Prince Mohammed bin Salman when he first announced his plans for the offering more than three years ago.
The prince initially 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 at $1.2 trillion to $1.5 trillion. The prince had also said the stock would trade on a prestigious international exchange like New York or London, but such a listing has been postponed, with some analysts questioning whether it will ever occur.
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 publicly traded, the Saudi government will remain by far the largest shareholder and, analysts say, can largely do as it wishes with an organization that generates most of the government’s revenue.
Geoffrey Heal, a professor of energy economics at Columbia Business School, said that potential investors had to weigh the trade-offs between Aramco’s enormous, low-cost oil resources and questions about how the company might be managed in the future.
“There is a lot of oil there, and it is high quality oil, ” he said, “but everything else is pretty negative about this.”
Mr. Heal said that Aramco faced many risks, including the geopolitical dangers in the Middle East, demonstrated by the aerial attacks in September on two major Aramco production facilities, and the potential for declining demand for oil because of concerns about climate change.
Perhaps the most immediate threat for investors, he said, could be an expected surge in oil supplies from Brazil, Canada, Norway and Guyana that might drive prices down. In that case, the company might struggle to earn sufficient profits to pay the substantial dividends of $75 billion a year that it has promised investors.
“Profits could be lower than we think,” Mr. Heal said.
Already, earnings for the first nine months of 2019 are running 18 percent lower than in the same period a year ago. Lower oil prices, lower output and the disruption caused by September’s attacks all probably played a role.
Stuart Joyner, an analyst at Redburn, a market research firm, said that in some respects Aramco is not being managed like Exxon Mobil or Royal Dutch Shell, which, he said, produce whatever oil they can to earn as much cash as possible for shareholders.
Instead, in recent years, the Saudi government has been throttling back Aramco’s production as part of a coordinated effort with OPEC and other producers, including Russia, to prop up prices.
“That does create a conflict of interest and an uncertainty in governance at the heart of the company,” Mr. Joyner said.