[dcolkitt]

The difference is that Saudi oil reserves basically cost nothing to extract. Maybe $5 a barrel. You literally poke a hole in the ground and oil bubbles out.

That makes Aramco significantly less risky than your typical oil company. Even if oil goes to $25 a barrel, the company will still be solvent, and even profitable. Mismanagement (like Pemex) is basically impossible under these conditions. It also means less capital reinvestment is necessary, so more dividends for the shareholders.

Less market risk, less operational risk, higher cash yield. All those things drive up the valuation multiple.

[bloak]

Personally I'd be worried that the easy-to-extract Saudi oil is about to run out and the Saudis know that and that's why they're selling. They run a fairly tight ship and might be capable of suppressing the truth about their oil reserves.