Saudi Aramco posted its biggest gain since its record listing after oil prices soared in the wake of Russia’s invasion of Ukraine.
Ramco, which overtook Apple last week to become the world’s most valuable company, trailed oil major rivals Shell and BP to report record first-quarter earnings.
Like them, the Saudi Arabian company’s results were boosted by crude oil’s jump to $110 a barrel following Moscow’s attack in late February.
State-controlled Aramco reported net income of $39.5 billion, up 82 percent from a year earlier, when global energy demand was still severely suppressed by the coronavirus pandemic.
The company’s free cash flow rose nearly to $31 billion, though it opted to leave its quarterly dividend unchanged at $18.8 billion. This allowed Aramco to reduce its leverage.
Gearing, a measure of debt to equity, fell from 14 percent in December to 8 percent at the end of March. The gauge surged over 20 percent during the pandemic as profit plummeted, forcing Aramco to borrow more.
Aramco has not only benefited from the 45 percent surge in oil prices this year, but also from Saudi Arabia gradually ramping up production along with other members of the Organization of the Petroleum Exporting Countries (OPEC).
The kingdom’s crude oil production averaged 10.2 million barrels per day between January and March, up 20 percent year-on-year.
Production is expected to continue growing until at least September, when the current deal between OPEC and its partners – a 23-nation group led by the Saudis and Russia – expires.
Shares of Aramco rose 4.2 percent to close at 42.35 riyals on Sunday.
The company raised nearly $30 billion with an IPO in Riyadh in late 2019, though it’s still 98 percent government-owned. It is now valued at $2.46 trillion.
Earnings topped analyst estimates of $38.5 billion, according to a median average of 12 forecasts compiled by the company.
Saudi Arabia is one of the few major oil producers trying to increase production capacity.
Many others are cutting back on exploration as they transition to renewable energy and seek to curb their greenhouse gas emissions.
The Saudis have blamed falling investment for the rise in prices, saying demand for oil and gas will remain strong for decades.
Aramco is spending billions of dollars to increase its maximum sustainable crude oil production from 12 million to 13 million barrels per day by 2027.
It also aims to increase natural gas production by more than 50 percent by 2030.
On Sunday, Aramco said it was due to complete gas projects in Hawiyah and Haradh in the east of the kingdom this year to pump an additional 1.3 billion cubic feet per day.
The world’s largest energy producer announced plans to further expand its downstream operations, including refining, trading and chemicals subsidiary Sabic.
During the quarter, Aramco bought a stake in a Polish refiner and said it will ship more oil to the eastern European country. It also agreed to invest in a 300,000 barrel-per-day refining and petrochemical complex in China.
https://www.independent.ie/business/world/saudi-aramcos-profit-soars-as-oil-prices-and-output-jump-41652073.html Saudi Aramco’s profit rises as oil prices and production rise