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High oil prices help Saudi Aramco earn $88B in first half

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DUBAI, United Arab Emirates (AP) — Saudi energy company Aramco said Sunday its profits jumped 90% in the second quarter compared to the same time last year, helping its half-year earnings reach nearly $88 billion. The increase is a boon for the kingdom and the crown prince’s spending power as people around the world pay higher gas prices at the pump while energy companies rake in top earnings.

Major oil companies had a strong quarter with Exxon Mobil booking an unprecedented $17.85 billion profit while Chevron made a record $11.62 billion. The U.K.’s Shell shattered its own profit record.

Aramco’s net profits were helped by second-quarter earnings ending in June that hit $48.4 billion — a figure higher than all of the first six months of 2021, when profits reached just $47 billion. It sets a new quarterly earnings record for Aramco since it first floated around 5% of the company on the Saudi stock market in late 2019.

Its earnings for just this past quarter are almost what Aramco’s full-year profits were in 2020, when demand for oil crashed during pandemic lockdowns. Its half-year earnings of $87.9 billion put Aramco on track to far surpass the full-year earnings of 2019, prior to the pandemic, when profits hit $88 billion.

The company credited the jump to higher crude oil prices and volumes sold, as well as higher refining margins. Saudi Arabia’s vast oil reserves are among the cheapest to produce in the world.

Aramco’s finances are crucial to the kingdom’s stability; when its margins are high, Saudi Arabia’s economic growth reflects that. As countries around the world grapple with inflation and recession, the International Monetary Fund projects the Saudi economy will grow by more than 7.6% this year, the highest globally.

Despite years of efforts by Crown Prince Mohammed bin Salman to diversify the economy, and some success in increasing non-oil revenue, Saudi Arabia continues to rely heavily on crude exports that pay for public sector salaries, generous benefits to citizens and defense spending. Aramco’s earnings also help the prince carry out his Vision 2030 infrastructure goals.

The company will pay a dividend of $18.8 billion for the second quarter to shareholders, as it has promised to do since its debut on the stock market. The higher profits bode well for the Saudi government, which is the main shareholder of Aramco.

Aramco is seen as the key to overhauling the Saudi economy. Its proceeds from the IPO were transferred to the country’s sovereign wealth fund to invest in projects to spur new sectors and generate new jobs for Saudi youth.

Brent crude has been trading at around $100 a barrel, even as OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have been steadily increasing production levels that had been cut during the height of the pandemic. The price of oil rose sharply after Russia invaded Ukraine in February. Prices have dipped below the $100 mark in past weeks amid slowed-down economic growth in China and the U.S.

Aramco President CEO Amin Nasser said he expects oil demand to continue to grow for the rest of the decade, despite current downward economic pressures. OPEC has said it expects world oil demand to rise by around 3 million barrels per day this year with total oil demand to average 100 million barrels a day.

Nasser said Aramco’s financial results so far this year reflect this increased demand for oil, even as countries around the world, including Saudi Arabia, pledge to cut their carbon emissions to avert catastrophic global warming levels.

“The world is calling out for affordable, reliable energy and we are answering that call,” he said, urging greater investments in oil and gas.

“At a time when the world is worrying about energy security, you are investing in the future of our business. Our customers know that whatever happens, Aramco will always deliver,” Nasser said in a short video released with the financial results.

Saudi Arabia is currently producing around 10.5 million barrels per day, with much of that exported to Asia and its largest customer, China. The crown prince has said the kingdom’s maximum production capacity is 13 million barrels per day. Aramco says it is working to one day reach that ceiling.

Aramco produces all of Saudi Arabia’s oil and gas with its production limits dictated by the energy ministry.

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Saudi Aramco profit surges 90% in second quarter amid energy price boom

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An employee looks on at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019.

Maxim Shemetov | Reuters

Saudi oil giant Aramco reported a stunning 90% surge in second quarter net income and record half year results on Sunday, as high oil prices continue to drive historic windfalls for “Big Oil.” 

Aramco said strong market conditions helped to push its second quarter net income to $48.4 billion, up from $25.5 billion a year earlier. The result easily beat analysts estimates of $46.2 billion.

“Our record second-quarter results reflect increasing demand for our products — particularly as a low-cost producer with one of the lowest upstream carbon intensities in the industry,” Aramco President and CEO Amin Nasser said. 

Aramco said half year net income soared to $87.9 billion, easily outpacing the largest listed oil majors, including Exxonmobil, Chevron and BP and other “Big Oil” companies, which are all benefiting from a commodity price boom.

Oil prices surged above $130 dollars a barrel earlier this year, as the global energy crisis, made worse by supply disruptions stemming from Russia’s invasion of Ukraine, roiled global markets and contributed to decades high inflation.

“While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential — both to help ensure markets remain well supplied and to facilitate an orderly energy transition,” Nasser added.

Aramco said it expects the post-pandemic recovery in oil demand to continue for the rest of the decade, despite what it called “downward economic pressures on short-term global forecasts.”

The blowout results are also a major windfall for the Saudi Arabian government, which relies heavily on its Aramco dividend to fund government expenditure. The Kingdom reported a $21 billion budget surplus in the second quarter. 

Aramco said it would maintain its dividend payout of $18.8 billion in the third quarter, covered by a 53% increase in free cash flow to $34.6 billion. 

Major gains

Aramco is using its major gains to invest in its own production capabilities in both hydrocarbons and renewables, while also paying down debt. 

“We are progressing the largest capital program in our history, and our approach is to invest in the reliable energy and petrochemicals that the world needs, while developing lower-carbon solutions that can contribute to the broader energy transition,” the company said.

Saudi Arabia, alongside its OPEC+ counterparts, has been under increasing pressure to boost oil output to ease high prices. Company executives said limited global spare production capacity was a major concern for the global pricing outlook.

Aramco said it achieved total hydrocarbon production of 13.6 million barrels of oil equivalent per day in the second quarter, and was working to boost capacity from 12 million barrels of oil per day to 13 million barrels of oil per day by 2027.

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Saudi Aramco Posts Record Quarterly Profit on Surging Oil Prices

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DUBAI—Saudi Arabia’s national oil company said Sunday that its net income rose more than 80% to record highs in the first quarter of the year, a surge that shows how some of the world’s biggest state-owned energy producers are benefitting from a price boom accelerated by Russia’s invasion of Ukraine.

Saudi Arabian Oil Co., known as Aramco, said its quarterly profit swelled to $39.5 billion in the quarter, a period during which Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, continued to rebuff U.S. requests to pump more oil to help tame surging crude prices, instead sticking by an agreement with Russia to only marginally increase output.

The agreement with Russia allows for production increases of around 400,000 barrels a day each month, but it has done little to stem the rise in oil prices, and the Saudis have pumped less than their share, according to the International Energy Agency.

Western countries including the U.S. have responded to Russia’s invasion of Ukraine by sanctioning exports of Russian oil, leading to fears of less oil in the market and higher prices. Some of Europe’s biggest economies are scrambling to find new sources of natural gas to replace Russian fuel on which they remain highly dependent.

The result has been a boon for traditional fossil-fuel producers in the Middle East. With oil prices rising as high as $139 a barrel in recent months and consistently above $100, Saudi Arabia has seen its fastest economic growth in a decade.

Last week, Saudi Aramco overtook

Apple Inc.

as the world’s most valuable company, with its market value rising to $2.4 trillion.

The Ukraine invasion and rising global oil prices have benefited Saudi Arabia. A gasoline station in Kenya.



Photo:

simon maina/Agence France-Presse/Getty Images

Soaring energy prices have also showered Western oil producers such as

Shell

PLC and

Exxon

Mobil Corp. with cash. But the companies are largely using the cash to reduce debt, accelerate share buybacks and otherwise reward investors, rather than increase exploration and other capital spending. Some have also suffered multibillion-dollar write-downs from their withdrawal from Russia.

For many members of OPEC and a coalition of Russia-led oil producers, known as OPEC+, high oil prices have been a windfall, providing a vital boost to their economies after years of slow growth due to relatively low prices, some OPEC delegates and analysts say.

Though the kingdom is trying to diversify away from oil, Aramco remains the engine of the Saudi economy. The company pumped an average of 10.2 million barrels a day between January and March, the most of any company in the world.

Crown Prince Mohammed bin Salman is seeking to restructure the Saudi economy by 2030.



Photo:

SAUDI PRESS AGENCY/REUTERS

Aramco is spending billions of dollars to up its oil production capacity from 12 million barrels a day to 13 million by 2027 and plans to increase its gas output by more than 50% by 2030.

Aramco is also looking to develop opportunities in refining and petrochemicals, known in the industry as the downstream sector. In recent months it bought a stake in a Polish refinery and said it would invest in a 300,000-barrel-a-day refining and petrochemicals complex in China.

Other Middle East energy producers are profiting from the energy-price boom.

Qatar, one of the world’s biggest natural-gas producers, is in talks to supply Germany, France and other European countries with long-term supplies of liquefied natural gas. In Iraq, one of the world’s biggest oil producers, officials say a windfall of more than $20 billion in oil revenues is putting the country on its strongest financial footing in years. Even Iran, where U.S. sanctions have crippled the oil industry, has ramped up exports in recent months.

In Saudi Arabia, gross domestic product in the first quarter expanded 9.6% from a year earlier, according to the kingdom’s statistics authority. London-based consulting firm Capital Economics estimates the Saudi economy will grow around 10% this year. That is far stronger than the 6.3% growth currently expected by most analysts, it said.

Saudi Arabia recorded a budget surplus equivalent to $15.3 billion for the first three months of 2022, the finance ministry said Sunday, bolstered by a 58% increase in oil revenues compared with the same period last year. It is the biggest surplus since the government began announcing budget figures on a quarterly basis six years ago.

Saudi Aramco’s first-quarter capital expenditure stood at $7.6 billion. The firm has previously set its full-year capital expenditure guidance at $40 billion to $50 billion, with further growth expected until around the middle of the decade.

Despite its free cash flow rising 68% to $30.6 billion, Aramco kept its quarterly dividend, a vital revenue source for the Saudi government, unchanged at $18.8 billion and approved the distribution of one bonus share for every 10 shares held in the company. That allowed the firm to reduce its gearing—a measure of debt as a percentage of equity—from 14% at the end of December to 8% at the end of March.

In March last year, Aramco’s gearing rose to 23%, above the company’s self-imposed cap of 15%, forcing Aramco to return to the debt market to meet its dividend commitment.

The Saudi government, with a stake of more than 94% in Aramco, has sought to monetize the country’s massive oil assets and use the proceeds to invest in industries outside of oil as part of Crown Prince

Mohammed bin Salman’s

plan to restructure the economy by 2030.

To help meet that goal, Prince Mohammed has tasked the Public Investment Fund to invest in companies and industries untethered to hydrocarbons. The government also transferred the $29.4 billion it raised from Aramco’s initial public offering on the Saudi stock exchange in 2019 to the PIF to deploy.

Earlier this year, the Saudi government said it transferred Aramco shares worth about $80 billion to the PIF as part of efforts to diversify the kingdom’s hydrocarbon-dependent economy.

—Ghassan Adnan and Stephen Kalin contributed to this article.

Write to Summer Said at summer.said@wsj.com

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Oil giant Aramco reports record first quarter as oil prices soar

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Saudi Aramco logo is pictured at the oil facility in Abqaiq, Saudi Arabia October 12, 2019.

Maxim Shemetov | Reuters

Oil giant Aramco reported a more-than 80% jump in net profit Sunday, topping analyst expectations and setting a new quarterly earnings record since its IPO.

The Saudi Arabian behemoth said net income rose 82% to $39.5 billion in the first three months of the year, up from $21.7 billion over the same period last year. Analysts polled by Reuters had forecast net income of $38.5 billion dollars. 

The record quarter for Aramco comes amid a standout quarter for Big Oil, which is benefiting from a sharp rise in oil and gas prices. Aramco said its earnings were driven by higher crude oil prices, rising volumes sold and improved downstream margins.

“During the first quarter, our strategic downstream expansion progressed further in both Asia and Europe, and we continue to develop opportunities that complement our growth objectives,” Aramco President and CEO Amin Nasser said in the earnings release Sunday. 

“Against the backdrop of increased volatility in global markets, we remain focused on helping meet the world’s demand for energy that is reliable, affordable and increasingly sustainable.”

With a market cap of around $2.43 trillion on Wednesday, Aramco last week surpassed Apple to become the world’s most valuable company. The companies’ market caps looked similar on Sunday.

Aramco stock is up over 15% so far in 2022. In March, the oil giant reported that its full-year profit last year more than doubled due to the ongoing rise in oil prices, driven higher by Russia’s invasion of Ukraine, looming European Union sanctions on Russian oil and the prospect of tighter supply.

Bonus Shares

The Aramco results reflect an ongoing momentum in the oil and gas industry, which has benefited from a more-than 45% increase in prices since the start of the year. Earnings from Aramco’s global peers such as BP and Shell have hit their highest level in years, despite incurring write-downs for exiting operations in Russia following the invasion of Ukraine.

Aramco is rewarding investors as a result. The company said it would use $4 billion dollars in retained earnings to distribute bonus shares to shareholders — amounting to one share for every 10 shares held. It also kept its enormous dividend stable at $18.8 billion dollars, covered by a 68% year-on-year increase in free cash flow to $30.6 billion dollars.

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Oil Giant Saudi Aramco Overtakes Apple As World’s Most Valuable Firm

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  • Saudi Aramco’s market value surpassed that of tech giant Apple on Wednesday.
  • The oil market has been boosted by fears of a supply crunch due to the war in Ukraine.
  • Tech stocks have been hit by growth concerns on the back of interest rate hikes.

Saudi Aramco has overtaken tech titan Apple as the world’s most valuable company, after a surge in the oil producer’s shares vaulted it above $2.4 trillion.

Apple’s


market cap

 fell to $2.37 trillion after its share price tanked 5.2% on Wednesday amid a rout in technology stocks. Meanwhile, state-controlled Aramco’s market capitalization stood at 9.1 trillion Saudi Arabian Riyals ($2.43 trillion.)

The value of the two companies could change again due to fluctuations in share prices, but the move on Wednesday underscores broader trends in the global economy.

The energy market is booming. The war in Ukraine has pushed up prices due to sanctions and boycotts against Russia and supply chain challenges. Benchmark US West Texas Intermediate was trading around $105 a barrel on Thursday, while international benchmark Brent crude was around $107 a barrel. Both grades are up 40% year-to-date.

That sent Aramco’s net profit more than doubling to $110 billion in 2021. Meanwhile, Apple warned of supply chain constraints in its last earnings release. At the same time, investors are fleeing tech stocks due to fears that rising interests will curb future earnings.

Aramco’s share price on the Saudi Stock Exchange is up about 30% this year so far. In contrast, Apple’s share price is down about 20% year-to-date.

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Saudi Arabia transfers Aramco shares worth $80 billion to wealth fund

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Check out what’s clicking on FoxBusiness.com.

Saudi Arabia transferred shares worth about $80 billion in oil giant Aramco to its wealth fund as part of efforts to diversify the kingdom’s hydrocarbon-dependent economy.

The transfer of a 4% stake in state-owned Saudi Arabian Oil Co., known as Aramco, will support the Public Investment Fund’s plan to grow its assets under management to over $1 trillion by 2025, from about $480 billion currently, the Saudi government said Sunday.

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The Saudi government, which will remain the largest shareholder in Aramco with a stake of more than 94%, has sought to monetize the country’s massive oil assets and use the proceeds to invest in industries outside of oil as part of Crown Prince Mohammed bin Salman’s plan to restructure the economy by 2030.

An oil tank is seen at the Saudi Aramco headquarters during a media tour at Damam city REUTERS/ Ali Jarekji ( REUTERS/ Ali Jarekji / Reuters Photos)

To help meet that goal, Prince Mohammed, the kingdom’s day-to-day ruler, has tasked the PIF to invest in companies and industries untethered to hydrocarbons. The government had also transferred the $29.4 billion it raised from Aramco’s initial public offering in 2019 on the Saudi stock exchange to the PIF to deploy.

A RUSSIA-UKRAINE WAR WOULD MEAN GLOBAL ENERGY SHOCK

Earlier this month, people familiar with Aramco’s strategy said the kingdom has restarted plans to list more shares of Aramco, the world’s most valuable oil company, with an ambition to sell as much as a $50 billion stake, which at current valuations would be 2.5% of the company. The listing of shares would be by far the largest in the history of capital markets and could prove difficult to pull off.

The stake-sale effort is still in the planning stage, and could still be delayed or changed, the people said. Riyadh has floated several different plans over the years aimed at raising funds via Aramco, some of which have ultimately faltered or been abandoned.

The share transfer to PIF will help bolster the fund’s strong financial position and its high credit rating in the medium term, according to the government.

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In a separate statement, Aramco said the deal is a private transfer between the kingdom and the PIF, and Aramco isn’t a party to the transfer and didn’t enter into any agreements or pay or receive any proceeds from the transfer.

The transfer doesn’t have an impact on Aramco’s operations, strategy or dividends-distribution policy, it added.

Write to Summer Said at summer.said@wsj.com

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Saudi Aramco posts 160% rise in the third quarter profit

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Saudi Aramco logo is pictured at the oil facility in Abqaiq, Saudi Arabia October 12, 2019.

Maxim Shemetov | Reuters

DUBAI, United Arab Emirates — Saudi Arabia’s oil giant Aramco has posted a 158% increase in third quarter net income to $30.4 billion, as the world’s largest oil companies continue to benefit from the reopening of the global economy and soaring oil and gas prices.

The result beat expectations, with analysts expecting a median net income of $29.1 billion for the quarter. Aramco reported net income of $11.8 billion in the third quarter of 2020.

“Our exceptional third quarter performance was a result of increased economic activity in key markets and a rebound in energy demand,” Aramco President and CEO Amin Nasser said on Sunday.

“Some headwinds still exist for the global economy, partly due to supply chain bottlenecks, but we are optimistic that energy demand will remain healthy for the foreseeable future,” Nasser added.

Aramco said the increase in net income was the result of higher crude oil prices and volumes sold, and stronger refining and chemicals margins in the quarter, as the company benefits from rebounding global energy demand and increased economic activity in key markets.

Market windfall

WTI crude oil has soared above $85 in recent weeks, a level not seen since 2014, as the market shifts focus from demand recovery to supply scarcity. Natural gas prices are up around 130% this year, meaning the full extent of the global energy crisis is more likely to be felt in the fourth quarter results.

Aramco declared a significant dividend of $18.8 billion to be paid in the fourth quarter. The payout can be covered by a jump in free cash flow to $28.7 billion in the third quarter, up from $12.4 billion for the same period in 2020. Gearing, a measure of the company’s debt position, also improved to 17.2% from 23% due to higher oil prices and stronger cash flows.

Aramco also said it would “invest for the future” with capital expenditure of $7.6 billion in the third quarter, representing a 19% increase, compared with the same period in 2020. Aramco said it expected 2021 capital expenditure to be approximately $35 billion.

The results confirm a bumper quarter for “Big Oil,” a term used to refer to the world’s largest oil and gas companies. U.S. oil majors ExxonMobil and Chevron also benefited from rising prices, reporting profit that soared to multiyear highs in the quarter. Royal Dutch Shell reported record cash flow, while TotalEnergies also saw a sharp rise in performance.

Profit and pressure

The strong numbers come as the sector faces renewed scrutiny from activists and cynicism over its climate ambitions. Companies, including Aramco and the UAE oil giant Adnoc, have launched climate initiatives just days ahead of the COP26 climate summit, while simultaneously planning to invest to increase oil production in the coming years.

“I think most people would agree that climate change is one of the biggest challenges facing society,” Aramco Chairman Yasir Al-Rumayyan told CNBC via email.

“We need a transition that does not ignore that petrochemicals are essential building blocks to modern life — including the smartphones we all use and the products we rely on to fight COVID,” he added.

Aramco aims to achieve net zero emissions from its wholly-owned operations by 2050, and simultaneously plans to increase oil output to 13 million barrels a day by 2037. A separate pledge from Saudi Arabia to invest almost $190 billion to achieve net zero emissions by 2060 received both praise and skepticism from oil industry observers.

“The reality is that the energy transition will be long and complex, and therefore oil and gas will continue to play a key role,” Al-Rumayyan said, while also offering commentary on the recent energy crisis and its link to the energy transition.

“Recent energy disruptions around the world are evidence of the need for a stable and inclusive energy transition,” Al-Rumayyan said. “We need a transition that provides a reliable, affordable and low-cost supply of energy that leaves no one behind,” he added.

Aramco said it would disclose further details on how it plans to navigate the energy transition and achieve its net zero strategy in its Sustainability Report due out in the second quarter of 2022.

“We fully recognize that we have a long way to go, and that the journey will not be easy,” Al-Rumayyan said. “We are confident that we can meet the challenges and provide the leadership, expertise, and tools to support global progress towards a low-emissions future.”

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Saudi Aramco posts near 300% leap in Q2 profit on global demand recovery

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Saudi Aramco logo is pictured at the oil facility in Abqaiq, Saudi Arabia October 12, 2019.

Maxim Shemetov | Reuters

Saudi state oil giant Aramco reported a stunning 288% increase in net income to $25.5 billion for the second quarter, while maintaining its dividend of $18.8 billion, as big oil benefits from higher prices and a recovery in worldwide demand. 

Aramco’s net income of $25.5 billion for the quarter compares to $6.6 billion in the same quarter of 2020. The result beat expectations, with analysts expecting a median net income of $24.7 billion for the quarter. 

“Our second quarter results reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum,” Aramco president and CEO Amin Nasser said in a company statement published Sunday.

Aramco said net income for the first half of the year was $47.2 billion, compared to $23.2 billion in the first half of 2020, representing a 103% increase. The company said the results were supported by the global easing of Covid-19 restrictions, vaccination campaigns, stimulus measures and accelerating activity in key markets. 

“While there is still some uncertainty around the challenges posed by Covid-19 variants, we have shown that we can adapt swiftly and effectively to changing market conditions,” Nasser said.

Dividend plans

Aramco said free cash flow was $22.6 billion in the second quarter and $40.9 billion for the first half of 2021, compared to $6.1 billion and $21.1 billion, respectively, for the same periods in 2020. 

This is significant, because free cash flow has now risen above the quarterly dividend of $18.75 billion for the first time since the start of the pandemic. Aramco already pays the world’s largest dividend, but the improving outlook has prompted some analysts to call for higher payouts.

“A dividend increase is needed to stay competitive,” BofA analysts said in a research note ahead of the earnings release. “Higher oil prices and OPEC+ driven production increases should support a significant free cash flow increase over the next couple of years,” it added.

Aramco responded by saying its dividend is staying at the “normal level” for the quarter, but it would “advise later” as to whether it would stick to the current payout plan. 

“We are looking at our sustainability program,” Nasser told CNBC on Sunday’s earnings call. “A lot of the elements of our capital program that we are currently considering have to do with crude-to-chemical and hydrogen, and all of these programs represent great opportunities, especially with the Shareek program,” he added.

Aramco, which is majority-owned by the Saudi Arabian government, is a key source of revenue for the kingdom. “All of this will be reviewed with our board, and we will decide at a later date regarding any additional dividend distribution,” Nasser said.

Price Outlook

Oil prices have surged around 40% in 2021 to around $70 a barrel, prompting big oil rivals BP, Chevron and Royal Dutch Shell to hike dividends and launch share buyback programs. 

“Our expectation is that the recovery will continue,” Nasser said. “We are seeing more openings of economies, and we expect by year-end the demand will be around 99 million barrels… and 100 million barrels next year as a forecast for total demand,” he added.

Amin Nasser, chief executive officer of Saudi Aramco, gestures as he speaks during a panel session on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Jan. 23, 2020.

Jason Alden | Bloomberg | Getty Images

Aramco also said it reduced its gearing ratio — essentially the ratio of how much the company is funded by debt versus funded by shareholder equity — to 19.4% on June 30, down from 23% on December 31, 2020. The decrease was primarily due to higher cash and cash equivalents and stronger operating cash flows, as well as proceeds in connection with Aramco’s recent crude oil pipelines transaction. 

“Our historic $12.4 billion pipeline deal was an endorsement of our long-term business strategy by international investors, representing significant progress in our portfolio optimization program,” Nasser said. 

Capital expenditure was $7.5 billion in the second quarter and $15.7 billion for the first half of 2021, representing an increase of 20% and 15%, respectively. Aramco said 2021 capital expenditure was expected to be approximately $35 billion.

Saudi Arabia’s Crown Prince Mohammed bin Salman said the kingdom would sell more Aramco shares earlier this year, but the company did not comment on the plans. Aramco also stopped short of commenting on a previously flagged oil-to-chemicals deal with Indian conglomerate Reliance Industries, which was expected to be formalized sometime this year.

“We continue to move forward on a number of strategic programs, which focus on sustainability and low-carbon fuels, maximizing the value of our assets, and advancing our downstream integration and expansion journey,” Nasser added.

“For all these reasons and more, I remain extremely positive about the second half of 2021 and beyond.”

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Saudi Aramco reports profit tumbled sharply in 2020

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The company announced Sunday that its net profit fell a whopping 44.4% to $49 billion in 2020. Dealt that significant blow, Saudi Aramco committed to spend less this year than it had anticipated: Aramco said it planned to spend about $35 billion in 2021 on capital expenditures, down sharply from its previous estimate of $40 billion to $45 billion.

Nonetheless, the oil company was upbeat about the future: It maintained its $75 billion dividend for the year and the company thinks it will return to pre-pandemic oil production levels by the end of 2021.

Saudi Aramco president and CEO Amin Nasser said on a call with reporters he is very optimistic about 2021, and he expects the company to reach close to 99 million barrels per day by the end of the year. He said this outlook is based on the views of different global entities and agencies, and he predicted demand will increase in 2022.

“Vaccine deployment will make the situation much better,” he added.

The profit drop reflects the coronavirus pandemic’s effect on global energy markets.

“As the enormous impact of Covid-19 was felt throughout the global economy, we intensified our strong emphasis on capital and operational efficiencies,” Nasser said.

The earnings report comes at a time when Saudi Aramco refineries have been facing drone attacks from Yemen’s Iran-backed Houthi rebels.

“Our reliability in 2020 despite Covid-19 and these attacks on different parts of our facilities in the north and the south and in Ras Tanura lately is 99.9%,” Nasser said. “It’s even higher than previous years.”

It’s further demonstration about the robust crisis management and continuity plans that we have.”

— CNN’s John Defterios contributed to this report.

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Saudi Aramco profit drops after Covid-battered year, upholds dividend

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A worker at an oil processing facility of Saudi Aramco, a Saudi Arabian state-owned oil and gas company, at the Abqaiq oil field.

Stanislav Krasilnikov | TASS | Getty Images

Oil giant Saudi Aramco reported a 44% slump in full-year 2020 results, but maintained its $75 billion dollar dividend payout, with CEO Amin Nasser describing the last twelve months as one of the most “challenging years” in recent history. 

Saudi Aramco, Saudi Arabia’s behemoth state oil firm, reported net income of $49 billion in 2020, down from $88.19 billion in 2019. The result was slightly below analysts expectations of $48.1 billion but still represents the highest of any public company globally. 

“In one of the most challenging years in recent history, Aramco demonstrated its unique value proposition through its considerable financial and operational agility,” Saudi Aramco Chief Executive Amin Nasser said in company statement Sunday.

Aramco said revenues were impacted by lower crude oil prices and volumes sold, and weakened refining and chemicals margins. 

The firm also said it expects to cut capital expenditure in the year ahead, and lowered its guidance for spending to around $35 billion from a range of $40 billion to $45 billion previously. 

Free cash flow slumped almost 40% to $49 billion, well below the level of its hotly anticipated dividend. Aramco also declared a payout of $75 billion for 2020, despite concern that it would take on additional debt to maintain it.

“Looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track and, as the macro environment improves, we are seeing a pick-up in demand in Asia and also positive signs elsewhere,” he added.

Shares in the top western oil and gas companies including Royal Dutch Shell and BP dropped to multi-year lows in 2020, as the coronavirus pandemic wrecked havoc across the global economy and sparked a historic collapse in the price of oil. Exxon Mobil, the largest U.S. energy company, posted its first annual loss.

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