If the Saudi Arabian Oil Company, better known as Saudi Aramco, can get its ducks in a row, we may see a 2018 initial public offering (IPO) that would create the most valuable public company in the world. The most recent figure being considered is an IPO of about 5% of Saudi Aramco, valuing the resulting publicly traded company at around $2 trillion.

Before that happens, however, Saudi Aramco has to get its books sorted out so that it has something to show potential investors that meets the requirements for financial transparency. According to a report at the Financial Times, the company is working with JPMorgan to do just that.

The Financial Times wisely notes: “Crucial to valuing Saudi Aramco will be its dividend policy for shareholders, and how much it pays in taxes and royalties to the state.” In other words, once the state creams off its share, how much is left over for investors? That’s a reasonable question because the whole reason for the IPO is to diversify the country’s economy and use the cash generated by the IPO to begin that process.

Saudi Arabia currently controls the country’s crude oil reserves, generally estimated at around 268 billion barrels, and as of June, the country’s oil minister said that the state would not relinquish control over either output targets or production capacity. That means that the publicly traded company could effectively be a contractor for the Saudi government, and likely be compensated in the same way as any other contractor. That’s just our guess, but until we hear differently, it’s not a bad one.

Getting Saudi Aramco’s books in shape for an IPO is focused on being able to report 2017 financial results in compliance with international standards. The company also plans to show potential investors accounts for 2015 and 2016 according to the same standard, most likely the International Financial Reporting Standards (IFRS).

A fund manager told the Financial Times:

The market will be cautious unless the information provided is in line with international [financial] reporting standards. There is a risk that the headline excitement will give way to an opaque and frustrating reality.

When and if the IPO happens, shares are expected to trade in Riyadh on the Saudi Tadawul exchange and at least one other exchange. New York may be out of the running thanks to the recent congressional vote permitting families of 9/11 victims to sue the kingdom for its alleged support of the terrorists who made the attacks. Because nearly two-thirds of Saudi oil is sold to Far East customers, a listing in Hong Kong, Shanghai, or Tokyo may be more likely.

Will an IPO get done? Investment bankers need to believe (or at least behave as if) it will happen in order not to get left out if it actually does (see Pascal’s wager). That means Saudi Aramco needs to provide credible financial statements, an audited estimate of its oil reserves and an outline of how the public company would be run. The Financial Times offers some advice on how investors can get what they need:

Financiers know they are dealing here with princes, not biddable industrialists from Akron or Aberdeen. Wise courtiers do not instruct or suggest. They drop hints. Publication of Aramco accounts would give them an opportunity to do so.

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