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Saudi Arabian Oil Co. (ARAMCO:SB) received an upgrade from Bernstein SocGen Group on Monday, with analyst firm raising its stock rating from Underperform to Market Perform while reducing the price target to SAR25.40 from SAR28.00.
The upgrade comes as Saudi Aramco (TADAWUL:2222)’s stock is "now trading close to our (reduced) new PT of SAR 25.4," according to Bernstein SocGen, which noted the change was not based solely on valuation considerations.
The firm highlighted Saudi Aramco’s unique operating structure, noting that the Saudi government—not the company—controls production levels through a concession agreement granting Aramco exclusive rights to explore, develop and produce the country’s hydrocarbons.
In January 2024, the Saudi government directed Aramco to maintain its current 12 million barrels per day (mbd) maximum capacity rather than expand to 13 mbd by 2027 as previously planned in 2019, resulting in the deferment of several key oil development projects.
Among the deferred projects is the next phase of Safaniya, described as "the world’s largest offshore field" with approximately 37 billion barrels of reserves and current output of about 1.3 mbd, which would have added approximately 0.7 mbd to the field’s production capacity.
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